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Danantara: An SOE superholding à la Temasek?
Can Danantara truly be structured and operated in the same way as Temasek?
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Danantara head Muliaman D. Hadad delivers a speech at an event in Jakarta in an undated photo. (JP/Dana Wardhana)
I
n Indonesia, state-owned enterprises (SOEs) contribute approximately 60 percent of the country’s gross domestic product (GDP). This is a substantial figure, especially considering that Indonesia ranks as the world’s 10th-largest economy by purchasing power parity.
According to the SOEs Ministry, the total value of SOE assets is approximately Rp 10.40 quadrillion (US$655.3 billion). Unsurprisingly, SOEs have remained a national priority across successive administrations. Over the past ten years, SOEs spearheaded infrastructure financing and development, while also undergoing sweeping reforms, reducing the number of entities from hundreds to just 55.
Under President Prabowo Subianto, the issue of SOE management has resurfaced, this time focused on the creation of a superholding entity. Although the blueprint dates back to the 1990s, President Prabowo seems determined to bring it to fruition, making it one of his administration’s early initiatives.
The Investment Authority of Indonesia (IAI) Danantara is envisioned as an emulation of Singapore’s Temasek Holdings. At least, that was what Muliaman Darmansyah Hadad, the head of Danantara and former chairman of the Financial Services Authority, said. However, can Danantara truly be structured and operated in the same way as Temasek?
While President Prabowo was visiting China and the United States, the launch of Danantara was postponed. This article explores three key differences between Danantara and Temasek, focusing on their legal bases, objectives and governance structures.
Danantara reports to the president
Danantara will be established through statutory law. Its delayed launch stems from the absence of a legal framework, with plans to amend Law No. 19/2003 on SOEs to enable its formation. This legal basis is crucial, as Danantara officials will be appointed by, report to and may be dismissed by the sitting president. By contrast, Temasek does not report to Singapore’s prime minister or president. It is a private investment company, operating through business registration rather than legislative or political processes.
