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View all search resultsDanantara and the discipline to let go
Danantara must resist passing out unconditional loans left and right lest it turns into a bailout fund for failing SOEs, and instead look to maintaining its commercial posture and stand as a catalyst for reform by rewarding discipline through capital injections.
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The logo sign of Danantara Indonesia stands atop a marquee at the headquarters of the Daya Anagata Nusantara sovereign wealth fund on Jl. Soeroso in Menteng, Central Jakarta, in this picture taken on Feb. 28, 2025. (Reuters/Willy Kurniawan)
D
anantara, Indonesia’s new sovereign wealth-style holding company for state-owned enterprises (SOEs), is already facing a major test. Tasked with delivering strong returns and operating free from political influence, it is now under pressure to bail out struggling firms such as Garuda Indonesia, Wijaya Karya and Waskita Karya, which have long relied on government aid without implementing meaningful reforms.
Given Indonesia’s weakening economic condition and limited fiscal space, some fundamental questions emerge: Should Danantara be used to rescue underperforming SOEs? Is such intervention economically and institutionally sound? And if so, how should it be structured?
The answer lies in creating a credible framework that links intervention to discipline, reform and accountability. Danantara must not serve as a lifeline for troubled SOEs without strict conditions.
If it is to support underperforming firms, Danantara must act as a disciplined investor, not a political operator, only helping out truly strategic enterprises with clear recovery paths, while others should be restructured, privatized, or phased out.
Danantara's creation on Feb. 24 marked a bold shift in Indonesia’s SOEs management. Modeled after regional peers like Singapore’s Temasek Holdings and Malaysia’s Khazanah Nasional, the fund is envisioned to professionalize and commercialize state asset management.
Shortly after its launch, however, Danantara was called upon to serve as a financial lifeline. The most recent example was on June 24, when it approved a Rp 6.65 trillion (US$407.4 million) shareholder loan to Garuda Indonesia, its first major injection of state capital.
This move contradicts the fund’s original purpose: deploying state capital with commercial discipline to generate long-term returns and support national development, free from political interference and short-term fiscal pressures.
