The Indonesian President Prabowo Suubianto arrived in power last year at the rear of a campaign with several major promises. Chief among them: 8% annual economic growth at the end of his mandate in 2029.
His imagination to get there is the last sovereign fund in the country, Danantara, abbreviation of Daya Anagata Nusantara, which means “the power of the future of Indonesia”. He is responsible for stimulating the economy, in particular thanks to interior investments.
The fund also takes up dozens of public enterprises in Indonesia, consolidating and rationalizing their operations to make them more competitive. The idea is that integrated management can lead to more efficient and optimized national resources, resulting in higher economic growth and better jobs.
However, criticisms have governance problems due to a revised law which gives the president greater control of entities and their billions of dollars in annual dividends. These concerns contributed to a drop in the Indonesian stock market index when the fund was launched at the end of February. Danantara, who is the responsibility of the president, will ultimately supervise all public enterprises (including world companies 500 Pertama, the oil and gas giant, and the electricity company Perusahaan Listrik Negara).
The idea of sovereign funds – investment funds managed by state players hoping to take advantage of their financial surplus – has existed since Kuwait set up in 1953 to manage its oil income. This surplus can come from sales of natural resources in oil-rich countries such as Saudi Arabia or Norway, currencies as in China, or even the tax revenue of bumpers in the case of Ireland. Sometimes the funds play an active role, supported emerging startups, making a play for strategic sectors or investing in companies based in their own country.
But Danantara is somewhat different in that he is trying to manage and invest in his own state companies while investing in excess funds from the dividends of her public enterprises. The CEO of the young entity, Rosan Roeslani, maintains that this will finally help the greatest economy in Southeast Asia to develop its potential.
Graphic by Fortune
“We have this double role: how can we optimize the assets of public enterprises to create more value, and at the same time create quality jobs?” Rosan says Fortune. As a sovereign fund, there must be yields, he notes, but priority is “sustainable economic growth”.
The greatest economy in Southeast Asia
Indonesia represents around 40% of the population and the land mass in the region. According to World Bank data, around 280 million people are spread over some 17,000 islands, and the country had a GDP of $ 1.4 billion in 2024, according to the World Bank data. This places Indonesia in the 20 best economies in the world.
While Indonesia was hardly affected during the Asian financial crisis of 1997-1998, it was one of the strongest artists in the region during the 2008-2009 global financial crisis, increasing by 4.6% in 2009. From 2010 to 2024, its economy increased on average by 4.74% per year, according to the World Bank.
But the country follows some of its neighbors in GNI per capita, which reached $ 4,910 in 2024. This is enough to classify it as a country of mid -midfielder by the definition of the World Bank. However, the GNI per capita in Singapore, Malaysia and Thailand reached $ 74,750, $ 11,670 and $ 7,120, respectively.
This means that all the people in Indonesia do not win as much as their regional peers – despite
Be blessed with many natural resources, such as oil, gas and critical minerals.
But Rosan thinks that Danantara can help Indonesia take advantage of her resources successfully. “We want to develop an added downstream industry;
Indonesia has already attracted investments in its nickel industry as part of its downstream strategy after prohibiting the export of crude nickel ore in January 2020 – well before Danantara.
A new phase
Danantara must also rationalize the dozens of OSDs in the country (an effort launched under the previous president Joko Widodo) and make them more competitive. “In the past, sometimes [SOEs] Think they are likely to monopolize. When you have no competition, you sometimes become more relaxed, ”explains Rosan.
Hilman Palaon, researcher at the Lowy Institute Indo-Pacific Development Center, thinks that Danantara marks a new phase. He “should play a key role in reshaping the SOE landscape: managing state investments, consolidating assets and directing restructuring efforts,” he said.
This involves reducing administrative formalities and unnecessary bureaucracy, as well as the reputation of the Opadeur of Indonesia and, sometimes, corruption.
“Maybe in the past, a SOE has always had special treatment,” says Rosan. “Usually, if there is a government project, it is always a priority that it is attributed to another SOE. This kind of priority that we are going to revise. ”
The continuous reform of SOEs is necessary because these companies are becoming increasingly important for the economy, notes Maxwell Abbott, associate director general and responsible for political risks and strategic intelligence for APAC in the Nardello & Co.
The country has already taken a step in the right direction, he said: “In recent years, Indonesia has made significant progress in improving the performance and efficiency of SOE by consolidating the number of OSSs and improving anti-corruption protocols.”
Rosan maintains that not all public enterprises are struggling with this issue, but that social societies in general should be more effective, transparent and digitized.
Artificial intelligence and digitization constitute one of the eight sectors that Danantara has targeted for investments, to increase the Indonesian economy while increasing the standard of living. Other sectors include renewable energies, food security and health care.
“We are still in all in terms of the health care industry. We still import 90% of our raw materials for pharmaceutical products, ”explains Rosan. “We are late in terms of doctors … just to respect the emerging market standard, not the OECD standard, we are short at around 100,000 doctors.”
Danantara has already signed several memorandums of comprehension or loans to Indonesian companies in strategic sectors. He has a memorandum of understanding with Acwa Power, a Saudi company specializing in desalination and technology of green hydrogen, to explore renewable energy investments. Total funding is estimated up to $ 10 billion.
It also has partnerships with QIA, the Qatar sovereign heritage fund, and CIC, the Chinese sovereign heritage fund, aimed at facilitating investments in Indonesia. At the national level, Danantara has invested in Chandra Asri, a petrochemical and energy company, and granted a loan of $ 405 million to the national airline Garuda Indonesia.
“Danantara’s first investment decisions show that Prabowo wants to ensure the domestic production of crucial industrial inputs and provide living lines to public enterprises in difficulty that play a leading role in the national economy,” notes Abbott.
The inherited game
With more than $ 900 billion in assets and annual dividends of approximately $ 8 billion which can be used to invest, by the estimate of Rosan, Danantara is not only a new force in global finance; It is a signal that Indonesia will now fully control its wealth in a responsible manner, will manage its resources with strategic foresight and will invest in its future.
“Danantara has great ambitions,” explains Palaon, research researcher at the Lowy Institute. “It reflects the daring vision of Indonesia to free itself from the average income trap and to become a developed nation, but the real challenge lies in the transformation of these ambitions into action.”
While Rosan was a pillar of Indonesian policy with different ministerial assignments, an ambassador to the United States and a role as campaign and strategist director of Prabowo, he is also a guy in finance. Before the policy, he worked in the bank and co -founded his own investment business, Recapital Group.
“I came from the private sector and I am actually assisted. [similar] To my previous job, invest in Indonesia or outside Indonesia, ”he says.
Under him are several notable peers who are also from the financial industry or the private sector, notably Pandu Sjahrir, the director of investments of Danantara and a first funder of the technology giant of Southeast Asia.
Danantara has also written non-Indonesians to siege at the Commission of Advisers, sitting on a voluntary and non-binding basis: the famous head of hedge funds Ray Dalio, eminent American economist Jeffrey Sachs and former Thai Prime Minister Thaksin Shinawatra.
The two Americans are not foreign to the country: Dalio Oceanx worked with Indonesian officials to map its seabed, and Sachs previously advised the Indonesian government.
And although the role of Thaksin can raise certain eyebrows due to allegations of corruption, Rosan says that Thaksin is respected in Southeast Asia and that his contribution would be useful.
If Danantara succeeds in transforming the economy of Indonesia and the lifting of the standard of living, it will undoubtedly strengthen the inheritance of Prabowo, which is still somewhat collapsed by his time as army commander during the dictatorship of the Suharto era from the mid -1960s to the 1990s.
Although more investments in the country associated with more competitive public enterprises would theory create more jobs, Rosan is aware of skepticism and waiting for the fund to be able to carry out.
“Obviously, when a new entity receives more than $ 900 billion in total assets, the wait is very high,” he said, adding that the fund “will work” not only in terms of yields, but will increase governance and compliance standards. “We are installing confidence at the moment by having the best talents, and also having good governance and good transparency.”
It is a strong affirmation. But when asked if he is convinced that the conversation around Danantara will be positive if he speaks again to fortune in five years, Rosan responds with a firm yes. As he says, we will see “a lot of difference”.
This article appears in the August / September issue of Fortune With the title “The CEO of Danantara thinks that the new sovereign fund can help Indonesia finally unlock its potential”
