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View all search resultsDanantara’s first year sparks doubts over investment focus, economic role
Analysts noted that some of Danantara’s investments over the past 12 months have potential, but others are less promising, with many still at the planning stage.
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President Prabowo Subianto delivers a speech on March 11 during Danantara’s anniversary event at Wisma Danantara, Jakarta.
(Courtesy of/Danantara)
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t 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.
