Ruth Dea Juwita, Jakarta – At its inception 12 months ago, President Prabowo Subianto tasked Danantara with a dual mandate, to deliver long-term returns like a sovereign wealth fund (SWF) while supporting the government's agenda by managing state assets and state-owned enterprises (SOEs). Yet its first year of investment activity suggests a tilt toward the latter rather than the former.
"Danantara has strayed into areas most SWFs do not venture, and governance is still not well established," Deni Friawan, a researcher at the Centre for Strategic and International Studies (CSIS), told The Jakarta Post on March 17. "[However,] if it goes under, the cost to the state would be enormous. It's simply too big to fail."
Deni acknowledged that some of Danantara's investments have potential, but others are less promising, with many still at the planning stage, raising concerns about whether the agency can generate returns sufficient to offset its cost of funds, including servicing returns on its issued bonds.
In its first year, Danantara has injected US$1.4 billion into debt-laden flag carrier Garuda Indonesia, provided $295 million in loans to Krakatau Steel, acquired hotel and land assets in Saudi Arabia with plans to deploy $1 billion on a haj village development, invested $7 billion in downstream projects spanning minerals to poultry and earmarked billions more for waste-to-energy projects.
The fund also pursued co-investments linked to local conglomerates, including a $200 million investment in Chandra Asri's petrochemical facility alongside a planned $1 billion investment in government-subsidized housing located in Lippo Group's Meikarta.
"[Mineral] downstream projects are capital intensive, while state involvement in poultry initiatives and the reported Grab-Gojek merger are risky and unusual for an SWF," said Deni.
"It raises concerns of re-centralization and a growing state role in the economy that could hinder growth [of private players]."
Launched in February 2025 with a sweeping mandate and expectations to manage $1 trillion in state assets, President Prabowo has positioned Danantara as his key vehicle to achieve 8 percent economic growth by 2029.
The agency, which has consolidated all state firms under its umbrella and takes their dividends to be reinvested elsewhere, reports directly to the President. It has been significantly involved in creating and repurposing SOEs to support Prabowo's flagship programs.
These include PT Perusahaan Mineral Nasional (Perminas), established to oversee rare earth minerals and once tasked with taking over the Martabe gold mine amid flooding issues in Sumatra, and PT Agrinas Palma Nusantara, which manages more than 4 million hectares of palm oil plantations seized from private companies accused of legal violations.
Another newly established SOE, PT Agrinas Pangan Nusantara, is tasked with handling infrastructure for Prabowo's Red and White Cooperatives (KDMP) program. The company has drawn scrutiny over its decision to import 105,000 trucks from India instead of procuring locally made products for the cooperatives.
Danantara has spent the past 12 months courting foreign investors and inking MoUs abroad. However, a series of setbacks at home, including mass unrest in August last year and a market sell-off triggered by index compiler MSCI in January, has raised questions about the agency's role.
Credit rating agencies Moody's and Fitch Ratings, which have cut their outlook for Indonesia's credit rating, have flagged Danantara's expanding mandate as a risk to the country's fiscal health and transparency. Analysts note that investors are awaiting clarity on the governance of the new institution and how it will influence the nation's fiscal management.
"The concerns [expressed by several rating outlooks] are valid. It is unclear what the fund plans to do, why certain projects are chosen or whether it can make decisions independently," Jahen Fachrul Rezki, an economy researcher at the Institute for Economic and Social Research of the Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), told the Post on March 17.
"Many have come to us with concerns about how independent Danantara is from political interference. That remains unanswered, and the fund will need to put in a lot of effort to clarify this."
Ambitious targets
President Prabowo has been blunt in reprimanding SOEs under Danantara for weak governance and performance. At Danantara's first town hall last year, he scolded underperforming SOE directors and stressed meritocracy.
He repeated similar warnings at Danantara's first anniversary event on March 11, where he demanded a 5 percent return-on-assets target, equivalent to $50 billion annually based on its self-estimated $1 trillion in assets. He also floated plans to place "envoys" inside each SOE to tighten oversight and plug financial "leakages."
"We must supervise them [SOEs] because these companies are the lifeblood of our nation. If that blood keeps leaking, our country will suffer," Prabowo said at the time.
Experts view the return target as ambitious, given that Danantara's revenue mainly comes from SOE dividends, which amounted to only around $5 billion in 2024, as well as from the issuance of low-coupon Patriot Bonds.
Danantara stated that it is preparing to raise its capital deployment to around $14 billion this year, up from several billion last year.
"The President clearly wants Danantara to be a value-generating engine for state assets," Ronny P. Sasmita, a senior analyst at the Indonesia Strategic and Economic Action Institution, said to the Post on March 12.
"But without disciplined governance, independence from political interference and capital allocated to truly productive projects, it risks becoming a massive superholding burdened by longstanding SOE inefficiencies and bureaucracy."