early three weeks have passed since the much-anticipated launch of Danantara, Indonesia’s latest and most ambitious investment entity, on Feb. 24, 2025. Positioned as a strategic vehicle to consolidate state-owned enterprises (SOEs), attract investment and become one of the world’s largest sovereign wealth funds, Danantara was introduced with strong national aspirations.
Yet beyond the spectacle, fundamental questions remain unanswered.
Key regulations governing Danantara were signed. These included Law No. 1/2025 as an amendment to the SOEs Law, Government Regulation No. 10/2025 to establish its governance structure and Presidential Decree No. 30/2025 to define its supervisory board and management.
Adding to the anticipation, Danantara CEO Rosan Roeslani confirmed recently that the formal announcement of its organizational structure was scheduled to take place soon.
Beyond these regulatory and structural developments, the public is left grappling with a crucial uncertainty: How will Danantara be governed?
At its launch, President Prabowo Subianto positioned Danantara as not just a sovereign investment fund, but as an instrument of national development. He justified its creation by pointing to persistent socioeconomic challenges, including child hunger, struggling farmers and infrastructure gaps. He argued that the country’s problem was not a lack of resources but poor management.
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While promising, these stated objectives leave a substantial amount of information undisclosed, particularly concerning the practical steps Danantara will take to address the identified challenges. One of the most striking contradictions of Danantara’s launch is its timing.
While the fund was introduced to generate national wealth, its announcement came against the backdrop of Prabowo’s acknowledgment that poverty and hunger remain persistent national challenges. The lavish launch ceremony stood in stark contrast to these concerns, raising skepticism about whether Danantara’s priorities truly align with the country’s most urgent economic needs.
Public expectations have also been shaped by Danantara’s aspiration to emulate Temasek Holdings, Singapore’s globally respected state investment firm.
However, unlike Temasek, which began by strengthening and professionalizing domestic state-owned companies before expanding into a global investment firm, Danantara appears to be taking a different approach. Instead of focusing on corporate transformation, it is already being positioned as a funding mechanism for various government-backed projects, some of which have yet to demonstrate clear financial viability.
At its inception, Temasek’s portfolio consisted of 35 state-owned companies across various sectors, including Keppel Shipyard and Singapore Airlines. Its approach was to first transform these enterprises into globally competitive entities through rigorous governance and strategic reinvestments before transitioning into a global investment firm.
In contrast, Danantara appears to be moving in reverse, pledging to fund a vast number of predetermined projects before ensuring the commercial readiness of its SOEs. This approach raises legitimate concerns about long-term sustainability.
Further compounding concerns about Danantara’s governance is the dual role of its leadership. Its CEO Rosan Roeslani also serves as investment and downstream minister, while COO Doni Oskaria remains deputy SOEs minister, a direct overlap between regulatory authority and operational decision-making.
Public scrutiny has intensified over whether this governance model is designed for professional oversight or political convenience.
Since its launch, one of the most pressing questions has been the source of Danantara’s initial capital. Chief investment officer Pandu Sjahrir has now clarified that Danantara’s first wave of investment, amounting to US$20 billion, will come from government capital allocations and dividend payments from the SOEs under its control. The government has estimated that SOEs will generate Rp 90 trillion ($5.6 billion) in dividends this year, some of which will be funneled into Danantara.
However, this funding mechanism has sparked broader concerns. Fitch Ratings has noted that Danantara’s influence on dividend policies could impact the Standalone Credit Profiles (SCPs) of the SOEs under its ownership.
While this is not Fitch’s baseline assumption in the medium term, requiring higher dividend payouts could weaken these enterprises’ financial standing. Additionally, state-owned firms’ SCPs could be affected if Danantara’s management approach leads them to take on riskier projects, or if their profitability declines as a result of aligning with the government’s broader economic growth agenda.
Adding to the uncertainty, Hashim Djojohadikusumo, the President’s brother, recently said Danantara would receive a $20 billion capital injection from the state budget annually for as long as Prabowo was in office. This raises concerns about fiscal sustainability and whether Danantara will operate as a self-sustaining investment institution or merely function as an extension of state financial policy.
Meanwhile, several government figures, including ministers and public officials, have openly expressed hopes that Danantara will fund their respective initiatives, ranging from housing programs to infrastructure megaprojects. This growing expectation further complicates the question of how the fund will prioritize its investments and whether it risks becoming an extension of state spending rather than an independent investment vehicle.
Danantara has the potential to be a transformative force, but only if it transitions from political ambition to institutional credibility.
At present, the business model remains unclear, financial sustainability needs further clarity and governance frameworks require significant strengthening. Without these essential safeguards, Danantara risks being perceived as a politically driven initiative rather than a legitimate economic force.
The coming months will be critical in determining whether Danantara can evolve into a genuine economic catalyst, or whether it will remain an experiment in state-led finance with uncertain outcomes. As taxpayers, we can only hope that Danantara delivers on its promises with transparency, sound governance and real economic impact, ensuring it serves the country’s long-term interests.
This article is published in collaboration with Tenggara Strategic
