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View all search resultsAnalysis: Danantara’s plan to consolidate SOEs faces hopes, hard questions
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A sign for sovereign wealth fund Danantara Indonesia is seen in front of its headquarters in Jakarta on Feb. 28, 2025. (Reuters/Willy Kurniawan)
S
overeign wealth fund Danantara is embarking on an ambitious overhaul of state-owned enterprises (SOEs), aiming to consolidate 844 SOEs and their subsidiaries into around 200 entities. As the fund moves forward with its major consolidation plan, questions about investment returns, governance and long-term strategy remain front and center.
Danantara’s consolidation initiative builds on earlier SOE reforms led by former president Joko "Jokowi" Widodo and Erick Thohir, who has retained his post as SOEs minister. Between 2019 and 2024, the number of SOEs was cut from 114 to 47 through the creation of sector-based holding companies to streamline operations. These included Pupuk Indonesia for the fertilizer sector, the Indonesia Healthcare Corporation for hospitals and InJourney for the aviation, tourism and transportation industries. These efforts focused primarily on parent SOEs however, leaving their sprawling network of subsidiaries and sub-subsidiaries largely untouched. Today, the SOE ecosystem consists of 844 companies, including affiliates.
Danantara now plans to reduce this number to just 200 through an estimated 350 corporate actions including mergers, spin-offs, business reprioritization and in some cases, the dissolution of noncore subsidiaries. The overarching goal is to create fewer, stronger and more competitive SOEs capable of operating efficiently in both domestic and international markets.
One of the first major actions under this initiative is the restructuring of seven ailing construction SOEs into three entities. Among them are the merger of publicly listed PT Wijaya Karya (WIKA) and PT Waskita Karya (WSKT) with PT Hutama Karya, supported by a government-backed Rp 3 trillion ($185 million) capital injection. This move is expected to stabilize the sector, which has suffered from years of debt and declining margins, and create a more capable national player in infrastructure development.
The insurance sector is also under review, with Danantara planning the creation of three new holding companies to cover life insurance, general insurance and credit insurance under an aim to pool specializations, improve scale and boost profitability. It also targets the country’s trade deficit in insurance services by building a larger and more effective national insurance provider. The plan includes state-owned insurance firms such as Perum Jamkrindo, IFG Life, Jasa Raharja, Askrindo, Jasindo and Taspen, as well as affiliated private insurance companies like AXA Mandiri, BNI Life and BRI Life. While concerns about reduced market competition exist, experts say the impact will be limited, as SOE insurers focus primarily on corporate clients, leaving the retail segment to private insurers.
Logistics consolidation is another key priority. Eighteen SOEs, including Angkasa Pura Logistik, Pos Logistik Indonesia, Pelindo Solusi Logistik and Semen Indonesia Logistik, will be merged to create an end-to-end logistics ecosystem to improve service integration across the supply chain from first mile to last mile. With more than 15,000 freight, warehousing and courier companies competing in the country, the sector is highly fragmented and saturated, putting pressure on margins.
