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.
Danantara should fulfill the Santiago Principles to attract investors
Adopting at least four of the Santiago Principles, described as "the globally accepted standards for governance, investment and risk management practices for sovereign wealth funds" by the SWF international forum, will help ensure the independence, transparency and attractiveness of the nascent Danantara fund.
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!
President Prabowo Subianto (center, back turned) shakes hands with his predecessor Joko “Jokowi“ Widodo on Feb. 24, 2025, during the launch of the Daya Anagata Nusantara (Danantara) sovereign wealth fund in Jakarta. (AFP/Bay Ismoyo)
T
o assess the role of Danantara, Indonesia’s new sovereign wealth fund (SWF) that was launched on Feb. 24, we should look at it through the lens of the Santiago Principles.
The Santiago Principles are the generally accepted principles and practices as to how SWFs are implemented or aspire to be implemented. These principles were formulated and agreed in 2008 in the Chilean capital by the International Working Group of Sovereign Wealth Funds, comprising 26 member countries of the International Monetary Fund.
Among the 24 principles endorsed by the working group, we highlight four key principles that are particularly pertinent to Danantara. Though Danantara is nascent, adhering to these principles is essential, given the value of the assets it is expected to manage. The stakes are high, and failure would be catastrophic.
The first principle pertains to Danantara’s governance framework, which should be sound and clear to facilitate the fund’s operational independence.
To carry out its duty in optimizing the investments of state-owned enterprises (SOEs), Danantara is equipped with two main organs under the law: the supervisory board and the management board. While the supervisory board could have a government representative, this is not the case for the management board, as it must be run by professionals, clear of any conflict.
Considering the mandatory nature of the management board’s requirements, we apparently have some work to do because the newly appointed CEO of Danantara is the incumbent investment minister. It seems that one is not enough, as the operational holding company of Danantara is led by a deputy SOEs minister who is concurrently a commissioner at state oil and gas firm Pertamina.
We could argue that the role of the investment minister and/or the deputy minister could benefit Danantara’s operations. However, given the substantial size of the fund, with an estimated initial asset base of US$900 billion, it would be prudent to employ professionals who can dedicate their full time and effort to managing the fund.
