Eko B. Supriyanto
PRESIDENT Prabowo Subianto officially launched the Investment Management Agency (BPI) Daya Anagata Nusa dan Antara (Danantara) on February 24, 2025, alongside the signing of Law No. 1 of 2025 on State-Owned Enterprises (BUMN) by Prabowo. Surprisingly, the Chairman of Danantara, who had been appointed on October 20, 2024, was replaced by Rosan Roeslani, who is also serving as the Minister of Investment and Down-streaming/Head of the Investment Coordinating Board (BKPM).
The day after Danantara’s official launch, the capital market took a sharp dive. Large-cap stock prices fell drastically. This could be attributed to investor concerns about the country’s fiscal health. According to Nomura Asia Insights’ report, Indonesia: Fiscal Risk Monitor, the 2025 state budget deficit is expected to increase by 0.9%, widening beyond the government’s original target of 2.5% of GDP. In response, Morgan Stanley downgraded Indonesia’s stock rating to underweight.
Danantara was established with the expectation of driving 8% economic growth. It is designed as a super holding company, similar to Singapore’s Temasek, which has been widely regarded as a success. Danantara has been given the responsibility of managing the assets and investments of state-owned enterprises (SOEs). The hope is that by separating regulatory and operational functions, the government can avoid conflicts of interest. In theory, this could make the management of SOE assets more business-focused and less influenced by politics.
However, this remains a significant concern, as Danantara operates within the framework of the 2025 SOE Law. Danantara and the Ministry of SOEs remain closely tied. This relationship has led to doubts about Danantara’s ability to operate independently. Upon reviewing the 2025 SOE Law, it becomes clear that several issues need to be addressed, particularly in terms of governance. One notable issue is the law’s failure to regulate dual roles. The CEO of Danantara, Rosan Roeslani, also serves as the Minister of Investment and Head of the Investment Coordinating Board (BKPM), alongside Erick Thohir, the Minister of SOEs. Meanwhile, Dony Oskaria, the COO of Danantara, is also the Deputy Minister of SOEs. How can a chairman who is a minister be properly supervised by another minister? This arrangement has led some experts to question whether the oversight of Danantara is truly independent, especially given the close political ties between those in charge.
This issue highlights the need for reform in Danantara’s governance. The Chairman must be able to focus solely on the organization. It is unrealistic to expect someone to juggle two high-stakes roles, serving as a minister while also managing an entity with assets worth IDR 14,610 trillion. This lack of focus raises concerns about Danantara’s credibility. Moreover, it is important to note that Danantara’s assets come with significant liabilities (debts), totalling IDR 6,975 trillion. For example, large SOEs like state-owned banks are heavily reliant on third-party funds.
Another area that needs attention is the legal structure of share ownership. The law specifies that: (1) all shares in the operational holding are owned by the state and its agencies, (2) the Republic of Indonesia holds 1% of the Merah Putih Series A shares with special rights through the Ministry of SOEs, and (3) Danantara owns 99% of the Series B shares in the operational holding. Despite owning 99% of the shares, Danantara does not have the authority to appoint directors, as this responsibility lies with the Ministry of SOEs. This means that the Ministry of SOEs still holds significant influence over Danantara, controlling key appointments within the organization. This lack of true autonomy raises concerns that Danantara is not fully independent in its operations. It is crucial that these governance issues are addressed to ensure Danantara’s success and avoid stagnation.
A further concern with the 2025 SOE Law is its stance on business judgment. Under the new law, mistakes made by SOEs are no longer considered a loss to the state. While this could allow for more flexibility and agility within SOEs, it should not be used as a loophole for mismanagement or abuse of power. Previous cases have demonstrated how political interference and criminal actions can taint government policies. At the same time, instances of deliberate corruption, such as the “blended” oil imports case involving Pertamina’s subsidiaries, illustrate the need for strict oversight.
For Danantara to achieve success similar to that of Temasek, its governance structure needs a complete overhaul. Failing to address these critical issues will only fuel ongoing investor scepticism about its ambitious target of driving 8% economic growth. With IDR 300 trillion of the state budget earmarked for development, as highlighted by Prabowo, the potential for growth is clear, but so are the risks of substantial losses.
To truly unlock its potential, the executives must be top-tier integrity, the team should have a proven track record of success, effectively manage challenges, so it can inspire investor confidence and achieve its objectives.
The day after Danantara’s official launch, the capital market took a sharp dive. Large-cap stock prices fell drastically. This could be attributed to investor concerns about the country’s fiscal health. According to Nomura Asia Insights’ report, Indonesia: Fiscal Risk Monitor, the 2025 state budget deficit is expected to increase by 0.9%, widening beyond the government’s original target of 2.5% of GDP. In response, Morgan Stanley downgraded Indonesia’s stock rating to underweight.
Danantara was established with the expectation of driving 8% economic growth. It is designed as a super holding company, similar to Singapore’s Temasek, which has been widely regarded as a success. Danantara has been given the responsibility of managing the assets and investments of state-owned enterprises (SOEs). The hope is that by separating regulatory and operational functions, the government can avoid conflicts of interest. In theory, this could make the management of SOE assets more business-focused and less influenced by politics.
