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Danantara may crowd out private investment
The wealth fund is committed to optimizing the role of SOEs as the backbone of national development, contradicting President Prabowo's promise to have the private sector lead the way.
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The exterior facade of the building housing sovereign wealth fund Daya Anagata Nusantara or Danantara is seen on Monday in Jakarta, after it was launched by Indonesian President Prabowo Subianto. The fund is set to be the biggest in Southeast Asia's largest economy and will give the ex-general greater control of the country's coffers. He wants to tap into the fund's assets -- planned to be more than US$900 billion -- to boost Indonesia to developed economy status, despite experts' concern about its governance.
(AFP/Bay Ismoyo)
D
anantara, the nation’s newly established sovereign wealth fund, could end up stifling growth instead of fueling it, analysts have warned, pointing out that the way the government has structured the fund appears to make it a direct competitor of private companies, which could discourage them from making new investments.
The official introduction document of Danantara stated that the wealth fund is committed to optimizing the role of state-owned enterprises (SOEs) as the backbone of national development.
That vision may contradict President Prabowo Subianto’s statements in the past calling for a bigger private sector role, as he championed their efficiency, innovation and expertise.
“I have said many times that the government will handle the important matters [...] concerning the protection of the people, among other things. But what the private sector can do, the private sector [must] develop. The private sector must do it all,” Prabowo said in January, stressing “Indonesia Incorporated” concept.
Danantara was launched by the President on Monday, and it will consolidate seven major SOEs in the energy, mining, telecom and banking sectors, but the agency said SOEs are expected to join the fund by the end of March, cementing its position to manage US$900 billion in assets.
Armed with $20 billion in initial capital, the President has envisioned Danantara as a driving force that will raise the country’s economic growth from 5.03 percent last year to 8 percent by 2029.
The fund is set to focus on a wide range of strategic sectors, from the downstream nickel, bauxite and copper industries to artificial intelligence data centers, oil refineries, petrochemicals, food production, aquaculture and renewable energy.
