Jakarta – Indonesia's government will set up a state investment agency to manage holdings in some of the biggest state companies after Parliament passed a Bill on Feb 4 approving the body, which is intended to operate like Singapore's investment company Temasek.
The creation of the Daya Anagata Nusantara Investment Management Agency, or Danantara, was announced soon after President Prabowo Subianto took office in October 2024, with the aim of improving the performance of, and returns from, state investments.
The new agency is set to receive 1,000 trillion rupiah (S$83.2 billion) in initial capital, lawmaker Darmadi Durianto from the Parliament's commission overseeing the Bill told Reuters.
Minister of State-Owned Enterprises Erick Thohir told Parliament: "Danantara is officially set up and formed in order to consolidate the management of state-owned companies and optimise the management of dividends and investments."
He said the agency would help the government reach Mr Prabowo's target of 8 per cent economic growth.
Government-owned stakes in Indonesia's biggest lenders Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia, as well as utility company Perusahaan Listrik Negara, miner Mining Industry Indonesia, energy firm Pertamina and telco Telkom Indonesia, are among those expected to be transferred to Danantara, media outlets have reported.
Those companies have combined assets reaching US$600 billion (S$814.4 billion), according to CreditSights, Fitch Group's debt research firm.
Under current rules, dividends are paid to the Finance Ministry, while government holdings in state companies are managed by the Ministry of State-Owned Enterprises.
Dr Toto Pranoto, a University of Indonesia lecturer who was a consultant for the Bill, told Reuters the new legislation proposes that the State-Owned Enterprises Ministry act as a supervisor for Danantara, and maintain a small stake in state companies and veto power on corporate actions.
Danantara will set up two entities: a "superholding" that manages state companies and an investment firm that will manage dividends and leverage assets, he said.
The agency seeks to replicate some of the success of Singapore's Temasek, which had a portfolio value of US$284 billion in investments globally as at March 2024, with a 14 per cent total shareholder return since its inception in 1974, according to its website.
In its January note, CreditSights said that if Danantara could efficiently and effectively consolidate state-owned enterprises (SOEs), it would bring about better funding access and operational improvements, as well as better access to global markets.
But it also warned that the agency could be susceptible to political interference.
"We see some risks upon the establishment of Danantara, including potential political influence on the utilisation of the fund, the integration process, and influence of Danantara on the strategic direction of the SOEs," it said, adding that Danantara was still seen as a modest credit-positive event for the concerned SOEs.
The office of Danantara did not immediately respond to a request for comment about possible political influence on the agency.