TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Politically independent oversight and good governance key to Danantara’s success
Realizing Danantara's full potential depends on addressing critical governance challenges, ensuring transparency, political independence and robust oversight.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Former president Susilo Bambang Yudhoyono (left), President Prabowo Subianto (center) and former President Joko "Jokowi" Widodo attend the launch of sovereign wealth fund Danantara Indonesia at the State Palace in Jakarta on Feb. 24, 2025. (Reuters/Ajeng Dinar Ulfiana)
I
ndonesia's sovereign wealth fund, Danantara, is prepared to transform the nation's economic landscape. With an initial capital of US$20 billion and projected assets surpassing $900 billion, the government envisions it as a catalyst for economic growth, aiming to elevate GDP by 8 percent.
Modeled after Singapore's Temasek Holdings, Danantara aspires to harness state-owned enterprises (SOEs) to bolster Indonesia's investment environment. While Temasek offers valuable lessons, Danantara must adapt to Indonesia’s unique political and economic landscape.
Realizing its full potential depends on addressing critical governance challenges, ensuring transparency, political independence and robust oversight.
A primary concern is Danantara's governance structure and its susceptibility to political influence. Unlike Temasek, which operates autonomously from Singapore's executive branch and is safeguarded by constitutional provisions, Danantara is anticipated to function under the SOEs Ministry according to the recently revised SOEs Law.
This alignment exposes it to the nation's five-year political cycles, potentially affecting board appointments and strategic decisions. Creating an independent governance framework that focuses on merit rather than politics when appointing board members is essential. Shielding decisions from political pressures will ensure stability and build credibility.
A legally binding governance charter can help define the boundaries between political oversight and operational management, mirroring the safeguards that Temasek benefits from. It is essential to implement clear separation between policymaking, regulatory supervision and operational execution to prevent conflicts of interest and improve efficiency.
Transparency is not just a rhetorical goal, it is the foundation of trust and credibility. Temasek exemplifies this by consistently achieving a 10/10 rating on the Linaburg-Maduell Transparency Index, positioning it among the world's most transparent sovereign wealth funds.
