Indonesia Officially Launches New Sovereign Wealth Fund Danantara

Indonesia has officially launched its new sovereign wealth fund, the Daya Anagata Nusantara Investment Management Board (“Danantara”), an investment vehicle designed to accelerate economic transformation and enhance the global competitiveness of Indonesia’s state-owned enterprises (SOEs).

Danantara has been positioned as a key tool to drive economic growth, with a mandate to oversee and restructure SOEs and massively expand its asset base. The fund is also a central tool in President Prabowo Subianto’s growth strategy; the president has committed to accelerating the country’s GDP growth from the current 5 percent to 8 percent by 2029.

At the launch ceremony on February 24, Subianto stated that the fund “must become a national development instrument that will optimize our way of managing Indonesia’s wealth.”

Danantara is Indonesia’s second sovereign wealth fund after the Indonesia Investment Authority (INA) launch in 2021. However, unlike INA, which focuses on asset management and co-investments, Danantara has direct authority over SOEs, including capital allocation, restructuring, and mergers.

Danatara’s planned investments

With an initial capital of $61 billion, Danantara aims to finance major infrastructure projects, expand Indonesia’s global investment presence, and enhance SOE profitability.

Danantara will operate under direct presidential oversight and is governed by three key bodies: the Supervisory Board, which ensures compliance and is chaired by the Minister of SOEs; the Managing Board, responsible for daily operations and investments; and the Advisory Board, which provides strategic guidance and includes former Indonesian presidents among its members.

Its investment strategy includes:

• Direct and third-party investments to optimize SOE performance and attract global investors.
• Restructuring initiatives, such as mergers and acquisitions, to improve financial sustainability.
• Strategic asset management, reinvesting SOE dividends into high-growth sectors like renewable energy and technology.

In the initial phase, Danantara plans to take over the management of seven SOEs, including three state-owned banks, two energy companies, one mining company, and one telecommunications company. These are:

• Bank Rakyat Indonesia (BRI) – one of Indonesia’s largest banks, focused on microfinance and micro, small, and Medium-sized enterprises (MSMEs);
• Bank Negara Indonesia (BNI) – a state-owned commercial bank;
• Bank Mandiri – Indonesia’s largest bank;
• Pertamina – a state-owned oil and gas company;
• Mineral Industri Indonesia (MIND ID) – a fully state-owned mining company with a foothold in the aluminum, gold, coal, bauxite, nickel ore, and copper industries, among others;
• Perusahaan Listrik Negara (PT PLN) – a state-owned electricity company;
• Telkom Indonesia – a state-owned telecommunications conglomerate;

After the take-over of these companies, Danantara’s total assets under management (AUM) will reach around US$900 billion, which would make it one of the largest sovereign wealth funds in the world.

Restructuring of SOEs under the amended SOE law

Danantara was created via an amendment to Law No. 19/2003 on State-Owned Enterprises, which was passed by the House of Representatives (DPR) on February 5, 2025. The amendment, the third since the law’s inception, seeks to make SOEs more efficient, transparent, and globally competitive while ensuring they contribute effectively to Indonesia’s economic growth.

Key reforms introduced in the amendment include:

• Separation of regulatory and operational functions – The Ministry of SOEs will regulate while Danantara will manage and invest in SOEs.
• The business judgment rule – Protects SOE executives from liability for investment losses if actions were taken in good faith and without conflicts of interest.
• SOE Holding Companies – Danantara will establish Investment Holding (asset management) and Operational Holding (SOE efficiency), each structured as an independent entity.
• Stronger audits and transparency – The State Audit Board (BPK) will oversee Danantara’s financials to ensure accountability and reassure investors.
• HR and social responsibility – New provisions promote women in leadership roles, inclusion of people with disabilities, and support for small businesses and local communities.
• Privatization and subsidiary regulations – Guidelines for SOE privatization and subsidiary formation to ensure these actions benefit the state and society.

Danantara’s expected impact

Danantara is expected to play a significant role in transforming Indonesia’s SOEs. By streamlining SOE management and enhancing governance, the hope is that Danantara will increase the efficiency of state assets, attract domestic and foreign investments, and enable SOEs to contribute more effectively to national wealth creation.

The separation of regulatory and operational functions is intended to allow for more agile and investment-driven decision-making within SOEs, reducing bureaucratic delays and fostering innovation. Meanwhile, stronger oversight and accountability measures aim to boost investor confidence and ensure that capital is deployed effectively and transparently.

Another component of Danantara’s strategy is its focus on expanding foreign investment opportunities. Intending to manage US$982 billion in assets by 2029, Danantara is positioning itself as a key gateway for global investors. Public-private partnerships (PPPs) in sectors like infrastructure, renewable energy, and digital transformation will provide structured entry points for foreign capital. Joint ventures with the SOEs under the funds purview will also allow investors to tap into mining, telecommunications, and finance sectors. 

To foster growth, the government is anticipated to introduce regulatory incentives, tax benefits, and streamlined processes, aiming to create a more investor-friendly environment. 

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