On February 24 2025, Indonesian President Prabowo Subianto officially launched the Daya Anagata Nusantara investment management agency, commonly known as Danantara Indonesia. This ambitious sovereign wealth fund (SWF) aims to consolidate state assets and channel investments into national development projects, with the ultimate goal of driving Indonesia’s economic growth.

Strategic investment vehicle

As reported by Antara, Danantara was created to optimise government investment and support Indonesia’s transformation into a global economic power. With an initial capital of IDR300 trillion (approximately $20bn), sourced from inefficient and misallocated government expenditures, the fund will focus on critical sectors such as natural resource downstreaming (nickel, bauxite, copper), artificial intelligence (AI), data centres, petrochemicals, food production, aquaculture, and renewable energy. Over time, Danantara is expected to manage assets exceeding $900bn, making it one of the world’s largest sovereign wealth funds.

Danantara is also expected to play a key role in Indonesia’s energy and industrial strategy. The government has announced that part of its funding will support coal gasification projects in South Sumatra and East Kalimantan, aimed at reducing reliance on LPG imports. Previous efforts to develop this sector stalled due to foreign investors pulling out, but officials now expect Danantara, along with local investors, to provide the necessary capital.

Governance and oversight

Danantara’s leadership structure is composed of key government and business figures. President Prabowo Subianto serves as the fund’s supervisor, while former Indonesian presidents Susilo Bambang Yudhoyono and Joko Widodo sit on the advisory board. The supervisory board is led by Minister of State-Owned Enterprises (BUMN) Erick Thohir, supported by figures such as Finance Minister Sri Mulyani Indrawati and former UK Prime Minister Tony Blair. Operationally, the fund is managed by Rosan P. Roeslani, the Minister of Investment and Downstreaming, alongside other senior officials.

The concept behind Danantara dates back 40 years to the ideas of economist Soemitro Djojohadikusumo, the father of President Prabowo. As reported by Antara, Soemitro envisioned a professionally managed institution to oversee state assets and drive economic development. While the idea remained unrealised for decades, it has now materialised under Prabowo’s administration.

Legal foundation and national impact

Tempo reported that Danantara's legal foundation is rooted in the Third Amendment to Law Number 19 of 2003 concerning State-Owned Enterprises (SOEs). The amendment was approved in a plenary session of the Indonesian House of Representatives on February 4 2025, setting the stage for the fund’s operations.

Prabowo has described Danantara as a "force that will shape Indonesia’s future," emphasising its role in economic consolidation. The name itself, he explained, derives from ‘daya’ (energy or power) and ‘anagata’ (future), symbolising the fund’s mission to drive national progress. The initiative also aligns with his and Vice President Gibran Rakabuming Raka’s campaign pledges, where they frequently highlighted the need for structural reform in the management of SOEs.

By consolidating government-owned enterprises into a single superholding, Danantara will oversee assets worth nearly  $1 trillion—equivalent to 60% of Indonesia’s GDP. Prabowo’s administration expects the fund to contribute to an 8% annual economic growth rate over the next five years.

Transparency and economic concerns

Despite its ambitious goals, the launch of Danantara has sparked debate over governance, transparency, and political influence. As reported by the South China Morning Post, some analysts warn that while Indonesia aims to emulate Singapore’s Temasek Holdings, Danantara’s management may not meet the same standards of independence and accountability.

A key concern is whether Danantara will operate free from political interference. The fund's board includes figures closely associated with Prabowo, raising questions about its autonomy. Additionally, revisions to Indonesia’s SOE regulations could weaken oversight. Critics argue that by classifying SOE losses as routine business risks, the fund’s executives may evade scrutiny from the national audit board and anti-corruption agencies.

Public sentiment has also been mixed. Last month, student-led protests erupted following Prabowo’s announcement of sweeping austerity measures, which involve redirecting billions of dollars from the state budget to Danantara and other flagship programmes, such as free school meals and maternal nutrition initiatives. These programmes alone are expected to cost $28bn annually, raising concerns about fiscal sustainability.

Lessons from around the region

China South Morning Post also reported that Danantara is not Indonesia’s first attempt at a sovereign wealth fund. In 2021, the government established the Indonesia Investment Authority (INA), which currently manages  $10bn in assets. However, INA has yet to achieve the scale and impact of its counterparts in neighbouring Malaysia and Singapore. The success of Danantara will depend on whether it can establish strong governance mechanisms and avoid the pitfalls that have plagued other funds in the region.

The 1Malaysia Development Berhad (1MDB) scandal, where billions were misappropriated from Malaysia’s sovereign wealth fund, serves as a cautionary tale. Former Malaysian Prime Minister Najib Razak was sentenced to 12 years in prison in 2022 for his involvement in the scandal. To prevent a similar fate, Danantara must ensure strict financial oversight and transparency.

The road ahead

While Danantara presents an opportunity for Indonesia to strengthen its economic position, the fund’s long-term success will hinge on governance, accountability, and financial discipline. Prabowo has assured that Danantara will be open to audits and public scrutiny, but whether this promise translates into genuine transparency remains to be seen, as mentioned by The Jakarta Post.

For now, Indonesia has embarked on an ambitious economic experiment—one that could either transform its financial landscape or expose it to significant risks. Observers will be watching closely to see whether Danantara delivers on its lofty promises or becomes another case study in mismanaged state funds.