Source Credit: Reuters
In a notable action to drive economic development, President Prabowo Subianto launched the Danantara Indonesia fund on Monday. This fund is projected to manage assets exceeding $900 billion and is key to Indonesia's goal of boosting its economic growth rate from 5% to 8%. The launch took place during a ceremony with politicians, business leaders, and international guests. Danantara Indonesia is the second sovereign wealth fund of the country, functioning separately from the current Indonesia Investment Authority (INA). Prabowo stated that the new fund would be vital in enhancing the performance of state-owned enterprises (SOEs) to support long-term economic progress.
The first investment phase of Danantara will total $20 billion, targeted at over 20 projects in sectors such as nickel, bauxite, copper processing, artificial intelligence, oil refining, renewable energy, and food production. These projects are part of Indonesia’s strategy to diversify its economy and upgrade its technology infrastructure. The fund aims to follow a model similar to Singapore’s Temasek, which is known for developing domestic leaders from its state-owned entities. Nevertheless, the launch faced backlash; last week, numerous student protesters raised issues about potential mismanagement of such a substantial fund, calling for more transparency and accountability.
In response to these concerns, President Prabowo committed to ensuring complete transparency in Danantara’s management. He promised the public that the fund would allow audits anytime, stating that it was "owned by the people." To manage the fund effectively, Danantara will create two divisions: a holding company to oversee state-owned enterprises and an investment unit to direct capital into critical industries. Rosan Roeslani, Indonesia’s Investment Minister and a former businessman, will lead the fund, with Pandu Sjahrir, a notable asset manager, directing the investment unit.
Danantara will target key sectors likely to stimulate future economic advancement. Major state firms, including Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, energy leader Pertamina, utility company Perusahaan Listrik Negara, and telecommunications giant Telkom Indonesia, are anticipated to gain from the fund's investments. This focused strategy aims to modernize Indonesia’s industries and position the nation more favorably on the global stage, drawing in foreign investments and encouraging technological advances.
