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View all search resultsAnalysis: Structural challenges could limit Danantara’s economic impact
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An employee walks in the courtyard of Wisma Danantara Indonesia, Jakarta, on Sept. 8, 2025. (Antara/Dhemas Reviyanto)
I
ndonesia’s sovereign wealth fund Daya Anagata Nusantara (Danantara) marked its first anniversary in February 2026 with plans to invest US$26 billion in downstream projects, equivalent to 1.7 percent of gross domestic product. While the scale is significant, questions remain about its broader economic impact amid limited state-owned enterprise (SOE) reforms and uncertainty over the implementation of its investment plans.
Danantara reflects a long-standing vision of President Prabowo Subianto to pool financial resources from SOEs and channel them into strategic national projects, inspired by ideas proposed by his father, economist Soemitro Djojohadikusumo.
However, the context surrounding Danantara’s establishment today is markedly different, as it is being built amid persistent fiscal deficits in recent decades. Despite this constraint, Prabowo has set an ambitious target for Danantara to generate a 7 percent return on assets (ROA), equivalent to roughly Rp 106 trillion ($6.28 billion) annually. This expectation has drawn comparisons with the long-term performance of Singapore’s Temasek Holdings, which has delivered similar returns over the past 20 years.
In its first year, Danantara secured Rp 86.4 trillion in dividend income from SOEs based on their 2024 performance. More than half, around 57 percent, came from SOE banks. The figure was partly driven by a sharp increase in dividend payout ratios compared with the previous year. While this strategy helped boost short-term dividend revenue, it also raised concerns about the long-term financial health of SOEs, as highlighted by Moody’s Investors Service in its recent revision of Indonesia’s outlook.
To diversify its funding base, Danantara has also sought external financing. The fund secured a $10 billion revolving credit facility from a consortium of 12 international banks and obtained equity commitments from several global sovereign wealth funds amounting to $7 billion.
Another funding instrument introduced by Danantara is the Patriot bond, which generated public debate because of its relatively low coupon rate of 2 percent, significantly below the yield of Indonesia’s 10-year government bonds, which hover around 6 percent. Despite the low return, the first issuance was oversubscribed, raising Rp 51.7 trillion against a target of Rp 50 trillion, partly because of the government’s tacit pressure on 46 conglomerates to participate.
The funds raised are intended to support several large-scale projects. In 2025 alone, four major programs were launched: waste-to-energy development (Rp 84 trillion), a caustic soda project (Rp 13.4 trillion), agricultural development (Rp 84 trillion) and data center infrastructure.
