In his first appearance as Indonesia’s president at the World Economic Forum in Davos on January 22, Prabowo Subianto boasted that his flagship sovereign wealth fund, Danantara Indonesia, will bring “significantly surprising” growth to the country.
“Danantara is established to finance and co-finance the industries of the future. We are determined to industrialize our country in a significant way,” Prabowo told global business leaders, asking them to co-invest with the fund. “With Danantara, I can stand here in front of you as an equal partner.”
Launched on February 24 last year, Danantara has become a financial behemoth, overseeing all Indonesian state-owned enterprises (SOEs) and their roughly USD 900 billion of assets, as well as spearheading investment talks with multiple foreign partners in industries from rare earths to semiconductors. It is also involved in government projects ranging from providing free school lunches to building hotels in Saudi Arabia for Muslim pilgrims.
But given its economic size and scope in Indonesia, credit rating agencies have raised concerns over a lack of clarity surrounding Danantara’s financing and governance, as well as its determination of SOE dividends and issuance of “patriot bonds” to fund its activities. These worries come despite Prabowo’s claim that the fund was set up “with strong oversight and institutional responsibility.”
Moody’s Ratings and Fitch Ratings cited Danantara as among the factors that drove their recent decisions to cut Indonesia’s sovereign credit outlooks from stable to negative.
“Insufficient policy coordination and cohesiveness around Danantara’s mandate raise risks to policy credibility and potential contingent liabilities for the sovereign,” Moody’s wrote on February 5. “For example, Danantara’s authority over SOEs’ dividend policies could place pressure on SOEs’ financial health.”
On March 4, Fitch said Danantara’s authority over SOE dividends, which had previously gone to state coffers through the Finance Ministry, contributed to the decline in government revenue last year. It also noted “uncertainty” over the fund’s mandate that “could expand over time to encompass quasi-fiscal activities through leveraged investments … potentially reducing fiscal transparency, policy consistency, and increasing contingent liability risks to the sovereign.”
Prabowo is dreaming big, aiming for 8% annual economic growth by the end of his five-year term in 2029, feeding roughly 80 million schoolchildren nearly every day and setting up 80,000 village cooperatives nationwide to give people access to affordable loans.
The Ministry of National Development Planning estimated that IDR 13,000 trillion (USD 767.3 billion) in investment is needed to meet the 8% growth goal. Prabowo appears to be delegating many of these tasks to Danantara, which has named mineral processing, food and agriculture, and energy security and transition among its priorities.
Danantara declined repeated interview requests from Nikkei Asia, but CEO Rosan Roeslani said last month that the fund planned 20 “downstream” projects this year estimated to cost a total of USD 26 billion, including six that broke ground on February 6 worth more than USD 7 billion in total. Among these projects are an alumina refinery and an aluminum smelter in West Kalimantan, biofuel plants in Central and East Java, and integrated poultry farming and processing facilities in six regions.
All the projects involve state-owned companies, including energy conglomerate Pertamina, miner Aneka Tambang, and food holding company ID Food. Some had been planned by the companies before Danantara was launched.
“We have developed our investment roadmap with a measured approach, oriented towards creating cross-generational value … [and] delivering healthy returns for the country,” Roeslani said.
Prabowo wants Danantara to achieve a 7% return on assets, an ambitious target considering Indonesian SOEs’ current average of 1.88%.
While Danantara was inspired partly by Singapore’s highly successful Temasek Holdings, it became clear that the Indonesian fund, unlike Temasek and most other sovereign wealth funds, has little interest in investing profits abroad.
Like the Indonesia Investment Authority (INA), a smaller fund that former President Joko Widodo launched in 2021, a key mission of Danantara is to mobilize capital for domestic projects.
INA is now overshadowed by Danantara, and their overlapping roles are causing confusion. “Many investors are still confused as to why Indonesia would need two [funds] with money that’s not so clear where it is,” a Singapore-based investment manager told Nikkei Asia.
Danantara has been very active in the past year. During Prabowo’s many trips abroad, the fund’s executives have either directly signed or witnessed the signing by Indonesian SOEs of preliminary agreements with multiple foreign partners.
The deals include a framework agreement with British chip designer Arm to develop Indonesia’s semiconductor sector; a memorandum of understanding signed between Perminas, a new state miner established by Danantara, and Abu Dhabi-based New Energy Metals to explore rare earth partnership in Gabon; and a memorandum signed with the Jordan Investment Fund for potential collaboration in areas such as infrastructure, the energy transition and technology.
But Danantara does more than hunt for investment partners. A revision to the SOE law passed last October grants it the authority to serve as a super holding company for all state enterprises, allowing the fund to take over much of the oversight role of the Ministry of State-Owned Enterprises, which has been reduced to a mere regulatory body.
The fund is now in charge of restructuring SOEs, determining their dividend payouts and reinvesting those dividends. Roeslani in October reiterated Danantara’s target of IDR 140 trillion (USD 8.3 billion) in payouts for fiscal year 2025, a 64% increase from IDR 85.5 trillion (USD 5 billion) in 2024.
Another key funding source for Danantara is “patriot bonds” targeting ultrawealthy Indonesians, with the first tranche worth IDR 50 trillion (USD 3 billion) issued in October at a 2% yield. That is far below the 6.2% offered on Indonesian sovereign bonds with similar maturities. Danantara is reportedly preparing to issue a second tranche worth IDR 20 trillion (USD 1.2 billion).
This is taking place as Danantara looks to invest USD 14 billion this year, compared with USD 8 billion committed last year, chief investment officer Pandu Sjahrir said in January, according to Reuters.
Apart from investing directly in projects, Sjahrir said the fund actively invests in the capital market, including during the recent turbulence following global index provider MSCI’s warnings over Indonesian shares’ inadequate free-float ratios and transparency. He said Danantara purchased stocks “with attractive valuations,” and shares of “companies with strong cash flow and liquidity.”
However, Lawrence Loh, a professor at the National University of Singapore (NUS) Business School, called the patriot bonds “modest-yield financing instruments that blur the line between market investments and political contributions.”
“Danantara will have to consider how the extension of such bonds and future variants can be healthily sustained in the financial markets,” Loh told Nikkei.
Airlangga University professor Rahma Gafmi is more straightforward: “Danantara’s governance is highly ineffective because the assets under management are not sound, discouraging investors [and] forcing them to [buy] patriot bonds.”
Nevertheless, Loh thinks Danantara has had a “formidable start,” describing the fund’s first year as “commendable, exceeding expectations.
“Launched with a clear national mandate, it was able to deploy capital quickly in domestic infrastructure, energy and digital projects, as well as consolidate oversight of major SOEs and key assets on a scale that has never been achieved before,” Loh said.
Prabowo said he wants “efficient” capital reallocation through SOEs restructuring, including by cutting the number of SOEs and their subsidiaries from more than 1,000 to no more than 300. Many SOEs have long been afflicted by poor governance and financial losses.
Danantara COO Dony Oskaria said it completed “urgent” restructurings of 21 SOEs last year, including those of struggling steelmaker Krakatau Steel, which received shareholder loans of IDR 4.9 trillion (USD 289.2 million), and flag carrier Garuda Indonesia, which got IDR 6.65 trillion (USD 392.5 million).
The revised SOEs law also allows Danantara to recruit foreign executives, who were previously barred from running SOEs. In October, it appointed two foreign nationals to Garuda’s board of directors, including a former Singapore Airlines executive.
Oskaria said Danantara aimed to raise SOEs’ total revenue to IDR 350 trillion (USD 20.7 billion) this year, from an estimated IDR 332 trillion (USD 19.6 billion) in 2025. He said the fund will review their business fundamentals, finances, and human capital, and consolidate them.
Danantara is also involved in nearly all of Prabowo’s other key programs, including providing financing for the free school lunch program and village cooperatives—with the loans coming from state-owned banks—construction of 15,000 temporary houses for victims of floods in Sumatra last year, and a plan to set up a new textile company with a USD 6 billion capital injection in response to mass layoffs in the domestic textile industry.
While Danantara appears to lack focus, Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies, thinks the fund’s top leadership is preoccupied with Prabowo’s pet projects, such as the free meal program for schoolchildren. As a result, “Greenfield investments such as renewable energy development, power transmission, and the battery ecosystem have yet to be realized and appear to be a low priority,” he said.
Moody’s noted that Danantara is still in the early stages of development, and that the government has established legal and institutional frameworks for the fund to carry out its mission. “We assume that further institutional development will provide greater clarity around Danantara’s governance and operations over time,” Moody’s said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.
Note: IDR figures are converted to USD at rates of IDR 16942.35 = USD 1 based on estimates as of March 16, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.