Indonesian President Prabowo Subianto said an ambitious new sovereign wealth fund will start operations this month, with a sweeping mandate to invest across a range of industries as he steps up efforts to boost annual growth to his goal of 8%.
An “initial evaluation” shows that the fund will have more than $900 billion in assets under management, Prabowo said in an online speech to the World Governments Summit on Feb. 13. He didn’t give a timeline to achieve that scale, which would be more than 90 times the size of an existing vehicle and make it one of the world’s biggest sovereign funds, alongside the likes of Singapore’s GIC Pte., which has built its global portfolio over more than four decades.
But the president said Daya Anagata Nusantara, or Danantara, will invest in projects including renewable energy, advanced manufacturing, downstream industries and food production, Prabowo said in the speech, which was posted online on the evening of Feb. 13.
“The fund, which will be launched on Feb. 24, will invest our natural resources and state assets into sustainable, high impact projects across sectors,” Prabowo said. “All these projects will contribute to achieving our committed target of 8% economic growth.”
Danantara will have an initial investment cash fund of $20 billion this year. “We plan to start something like between 15-20 multi-billion dollar projects, which will create significant value add for us,” Prabowo said. “I am very confident. I’m very bullish.”
The president, who took office in October, didn’t give other specifics, or outline how Indonesian state assets will be progressively shifted to the fund. But he has pledged to lift growth from the current level of around 5%, and drastically pared back a planned tax hike on New Year’s Eve, hours before it was to take effect.
Southeast Asia’s largest economy has also been ramping up efforts to attract foreign investment and reduce its reliance on raw commodity exports by developing value-added industries. Danantara is expected to play a key role in advancing Prabowo’s economic agenda by investing in local businesses.
Representatives of Danantara, the Ministry of State-Owned Enterprises, and the Presidential Communication Office did not immediately respond to requests for comment on the basis of the figures.
The announcement comes just over a week after parliament passed an amendment to the state-owned enterprises law paving the way for the fund to oversee state-owned companies, their operations, investments, and dividends. Initial funding may come from at least 1,000 trillion rupiah (roughly $60 billion) in cash, state assets, and government-owned shares.
Indonesia’s government holds significant stakes in an array of local companies, including the likes of PT Bank Mandiri, the nation’s largest lender, and PT Telkom Indonesia, though it is unclear if or when those kinds of holdings would be transferred into the Danantara.
Despite the lack of detail on Danantara’s structure or investment strategy, but the fund is expected to report directly to the president and be overseen by a supervisory board. A regulatory framework is expected soon to clarify its operations. The fund is currently led by Muliaman Hadad, a former deputy governor of Bank Indonesia.
Still, there are plenty of questions to be answered, including on specifics of its strategy and how it will ensure both healthy returns and good governance in its handling of existing state-owned assets and its investments in new ones. An existing vehicle, the Indonesia Investment Authority, had less than $10 billion of assets under management according to a statement on its 2023 performance.
GIC, which doesn’t reveal its assets under management but is estimated to oversee around $800 billion, has roughly 2,300 employees in 11 global offices, according to its website. Norges Bank Investment Management, founded in 1969 after one of the world’s largest oil fields was discovered off the coast of Norway, has roughly $1.8 trillion of assets in everything from bonds and stocks to real estate and renewable energy infrastructure.
