Danantara: Indonesia’s New Sovereign Wealth Fund

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes

Indonesia has launched Danantara, a sovereign wealth fund designed to optimize the management of state-owned enterprises (SOEs), attract foreign capital, and drive national economic growth. With an initial capital of at least 1,000 trillion rupiah (US$61 billion), Danantara is positioned to be one of the largest financial instruments in Southeast Asia.

Although not Indonesia’s first sovereign wealth fund, Danantara marks a strategic shift in how the country manages state assets and long-term investments. It builds upon the foundation of the Indonesia Investment Authority (INA), established in 2021 under President Joko Widodo, which currently manages US$10.5 billion in capital. However, the creation of Danantara aligns with President Prabowo Subianto’s more ambitious economic agenda, which seeks to achieve 8 percent annual GDP growth during his five-year term.

To support this vision, Danantara aims to expand its asset base significantly, to manage $982 billion by 2029. If successful, this would make Danantara the fourth-largest sovereign wealth fund in the world, putting it on par with investment giants like Norway’s Government Pension Fund Global and Abu Dhabi Investment Authority.

Why Danantara was Created: Addressing economic ambitions beyond INA

Indonesia’s previous sovereign wealth fund, the Indonesia Investment Authority, was launched in 2021 to attract foreign investment into infrastructure, banking, and state-owned enterprises. However, with a capital base of just US$10.5 billion, INA was not designed to consolidate and restructure SOEs at scale.

By contrast, Danantara has been given a much broader economic transformation mandate. Unlike INA, which focuses on asset management and co-investments, Danantara has the authority to directly oversee SOEs, approve capital increases, and restructure companies through mergers, acquisitions, and spin-offs.

This shift reflects Prabowo’s goal of accelerating economic growth, securing Indonesia’s position as a regional economic powerhouse, and ensuring that SOEs contribute more effectively to national wealth creation.

Financial strength: Danantara’s asset base and economic potential

Danantara’s US$61 billion starting capital makes it a major player among global sovereign wealth funds. But its real ambition lies in scaling up— with projections of reaching US$982 billion in assets under management by 2029.

With this level of capital, Danantara is expected to:

  • Finance large-scale infrastructure and industrial projects to accelerate economic modernization.
  • Expand Indonesia’s global investment footprint by entering international markets.
  • Strengthen SOE profitability through strategic capital management and restructuring.

Governance and oversight: Ensuring accountability and strategic decision-making

Danantara operates under a structured governance model designed to ensure accountability, financial discipline, and independence from political interference.

Key governance structures include:

  • Supervisory board – Appointed by the President of Indonesia, responsible for setting high-level strategy and ensuring transparent governance.
  • Executive management team – Led by financial and investment experts, tasked with managing daily operations and optimizing SOE asset performance.

Unlike many previous SOE investment models, Danantara is expected to operate with strong financial oversight, strict reporting mechanisms, and international best practices.

Investment Strategy: Driving growth and maximizing returns

Danantara’s investment strategy is designed to optimize SOE performance, attract global investors, and ensure Indonesia’s long-term economic stability.

Direct and indirect investments

  • Danantara will invest directly in SOEs while also facilitating third-party investments to enhance capital efficiency.
  • Partnerships with international institutional investors will be prioritized to bring in foreign expertise and funding.

Capital increases and corporate restructuring

  • Danantara has the authority to approve capital injections and restructure SOEs through mergers, acquisitions, and spin-offs.
  • This approach will boost efficiency and improve financial sustainability across Indonesia’s largest state-owned enterprises.

Asset management and dividend optimization

  • The fund will leverage SOE assets strategically to generate long-term revenue streams.
  • SOE dividends will be reinvested in high-growth sectors, including renewable energy, technology, and digital infrastructure.

Key SOEs under Danantara: The fund’s investment backbone

Danantara consolidates Indonesia’s most strategic and profitable state-owned enterprises, including:

  • Perusahaan Listrik Negara (PLN) – State power utility, driving the country’s energy transition.
  • Pertamina – The state-owned oil and gas giant, leading Indonesia’s energy security and renewable energy investments.
  • PT Mineral Industri Indonesia (MIND ID) – Overseeing Indonesia’s vast mineral and mining sector.
  • Telkom Indonesia – The largest telecom operator, playing a crucial role in Indonesia’s digital economy expansion.
  • Bank Mandiri, Bank Rakyat Indonesia (BRI), and Bank Negara Indonesia (BNI) – Three of Indonesia’s largest state-owned banks, driving financial inclusion and economic growth.

Foreign Investment Opportunities: A Gateway for Global Investors

Danantara is actively positioning itself as an attractive destination for foreign investment, offering structured investment channels in key industries.

With a clear investment roadmap and a target of managing US$982 billion by 2029, the fund offers structured entry points for foreign capital.

Investors can engage through public-private partnerships (PPPs) in infrastructure, renewable energy, and digital transformation projects, or form joint ventures with SOEs in sectors such as mining, telecommunications, and finance. Additionally, as Danantara seeks to optimize and privatize select state-owned assets, foreign investors may have the opportunity to acquire equity stakes in key Indonesian enterprises.

The government is expected to introduce regulatory incentives, including tax benefits and streamlined bureaucratic processes, to ensure a favorable business environment and attract global investment.

Conclusion: Danantara’s Role in Indonesia’s Economic Future

Danantara is Indonesia’s most ambitious sovereign wealth fund initiative. Its clear strategy is to expand assets to nearly US$1 trillion, enhance SOE performance, and attract global investment.

If executed successfully, it has the potential to transform Indonesia’s economy and solidify its status as a global investment powerhouse.