Karnoto Mohamad
The management of state-owned enterprises (SOEs) is entering a new phase. All SOEs will be placed under the management of the Investment Management Agency (BPI) of Dana Anagata Nusantara (Danantara), which was launched by President Prabowo Subianto on February 24, 2025. Prabowo envisions Danantara as one of the world’s largest sovereign wealth funds (SWFs) and a new engine to drive Indonesia’s economic growth toward 8 percent, as promised in his political campaign.
Currently, economic growth is at risk of stagnating at around 5 percent. In fact, it could slow down further to below 5 percent due to global geopolitical tensions and U.S. President Donald Trump’s economic policies, which have triggered a trade war, casting a dark shadow over the global economic outlook for 2025. Domestically, various social media hashtags criticizing Prabowo Subianto’s policies have emerged, amid weak consumer purchasing power and a wave of layoffs. To stimulate economic growth despite limited fiscal capacity due to the state budget deficit, the government is relying on SOEs as an alternative driver outside the state budget.
With managed assets reportedly reaching around IDR 15,000 trillion, Danantara is expected to leverage these resources and act as a catalyst for economic development. However, upon closer examination, the actual assets of SOEs are not as large as claimed, as they include a significant amount of debt. According to the Ministry of SOEs, as of 2024, the total assets of SOEs increased by 5.3 percent to IDR 10,950 trillion. However, SOEs also carry an estimated debt of around IDR 7,000 trillion. By the end of 2023, SOE debt stood at IDR 6,957.4 trillion, consisting of IDR 1,192.2 trillion in short-term debt, IDR 4,042.1 trillion in liabilities to financial institutions, and IDR 1,722.9 trillion in long-term debt.
After deducting debt, the net assets of SOEs amount to only around IDR 4,000 trillion. This does not even take into account the decline in SOE banking stocks this year. If potential internal and external risks are factored in, the value could be even lower. Meanwhile, a total of US$186 billion, or approximately IDR 2,920 trillion, is needed to cover maturing debts and interest payments.
The next challenge is that many SOEs are still burdened with loss-making companies. If the performance of SOEs under Danantara as business units is not improved, it will be difficult for Danantara to access financial resources from the market. “Instead of serving as a national financial resource to secure development funds outside the state budget, Danantara will have to work hard to improve the performance and balance sheets of SOEs, which are heavily in debt,” said a senior banker to Infobank.
To ensure that this is not merely an asset relocation from the Ministry of SOEs to Danantara, a comprehensive restructuring and rationalization of SOEs must be carried out. Danantara’s strong assets currently come from only four banks. The banking SOEs are in a better position because they are subject to strict regulations from the Financial Services Authority (OJK). “This means that a company’s good performance is a result of proper governance and oversight by a competent regulator. If many non-banking SOEs are suffering losses, it is ultimately due to the oversight—by the government itself,” he added.
The motive behind the establishment of Danantara also differs from most sovereign wealth funds (SWFs) worldwide. Danantara was created to relocate resources from the Ministry of SOEs in order to attract debt and investment due to the country’s financial shortfall (deficit). In contrast, SWFs in other countries are formed when a nation has a budget surplus, allowing it to manage excess funds as longterm financial reserves for future generations.
For example, Norway amassed significant wealth after discovering the world’s largest offshore oil field in 1969. As a result, Norway established Norges Bank Investment Management, which was formally enacted through legislation in 1990. By 2024, this SWF had recorded a profit of up to IDR 3,560 trillion, making it the largest in the world.
Singapore, despite lacking natural resources, has strived to become a leader in infrastructure and public services to establish itself as a major financial hub in Asia. The small nation established Temasek in 1974 to commercially manage an initial portfolio of SGD 354 million transferred from the Singapore Ministry of Finance. This decision allowed the Singaporean government to focus more on its primary role in policymaking and regulation.
It seems that Indonesia seeks to replicate Temasek by transferring SOE assets from the Ministry of SOEs—a bureaucratic institution—to Danantara as a business entity. However, the governance structure appears to be different. Temasek’s board of directors (BOD) consists of independent figures. “They are supported by a board of advisory members, which includes former CEOs of global companies and prominent local business figures. Government oversight is relatively minimal, except for the appointment of the CEO and key officials, which require presidential approval,” said Toto Pranoto, a state-owned enterprise analyst from the University of Indonesia.
Meanwhile, in Danantara, both the management and supervisory board consist of cabinet members who were previously part of the political campaign team. The Chief Executive Officer (CEO) is Roslan Roeslani, who also serves as the Minister of Investment and Downstreaming while concurrently heading the Investment Coordinating Board (BPKM). Below him, the Chief Operating Officer position is held by Dony Oskaria, who also serves as the Deputy Minister of SOEs. The Chief Investment Officer role is occupied by Pandu Sjahrir. Additionally, two former presidents are also part of the advisory board.
The Supervisory Board is chaired by Erick Thohir, who has been the Minister of SOEs since 2019. His deputy is Muliaman D. Hadad, and the two other members are Sri Mulyani, who also serves as the Minister of Finance, and Tony Blair, the former Prime Minister of the United Kingdom. Tony Blair’s appointment has raised public questions and is suspected to be an effort to build global trust in Danantara.
The entity that is more similar to Temasek in terms of market positioning is actually the Indonesia Investment Authority (INA). Established in 2021, INA is legally mandated to report directly to the president and is led by Ridha Wirakusumah, a professional banker with a global network and extensive experience in corporate restructuring.
Unlike INA, Danantara carries significant political weight, despite being legally distanced from the political processes in the House of Representatives (DPR). Because of this strong political influence, Danantara will have to work hard to convince global investors, who often hesitate to engage with SOEs, especially for direct investments in infrastructure. This challenge was previously encountered by Bambang Brodjonegoro, the President’s Special Advisor on Economic Affairs, when he served as Minister of National Development Planning/Head of Bappenas.
At that time, Bambang met with Australia’s largest pension fund, which was seeking business partners in the infrastructure sector. "Since most toll roads were controlled by SOEs back then, I suggested they meet with our state-owned enterprises (SOEs). They immediately responded, ‘No SOE, please.’ They did not want to engage with SOEs and preferred dealing with private companies," Bambang recalled during the Infobank Economic Outlook 2025 event in Jakarta in early February.
However, President Prabowo Subianto remains optimistic that Danantara, with total managed assets exceeding USD 900 billion, will become the world’s largest SWF. “Danantara is not just an investment body; it is a national development tool that must transform the way we manage the nation’s wealth for the prosperity of all Indonesians,” he stated during the launch of Danantara on February 24, 2025.
Prabowo has announced that funds from the Rp306 trillion budget cuts in ministries and government agencies (K/L) will be allocated as Danantara’s initial capital. Previously, the government had planned to use these cuts to support the expansion of flagship programs such as free nutritious meals, free medical check-ups, and school renovations.
On the other hand, Danantara, which is receiving funds from these efficiency-driven budget cuts, will not generate immediate results. “Even in the long run, it depends on the projects—whether they will be profitable or not, whether they will have a significant multiplier effect, whether they will create many jobs, and whether they will help expand the middle class,” said senior economist Raden Pardede in an interview with Infobank in late February.
The weakening purchasing power and declining middle-class population pose major threats to the economic slowdown in 2025. In 2024, economic growth slowed to 5.03 percent from 5.05 percent in 2023. Last year, this slowdown was triggered by weakening household consumption, which accounts for 54% of the gross domestic product (GDP) but grew only 4.94 percent. Government spending still grew by 6.61 percent, and gross fixed capital formation (investment in fixed assets) only increased by 4.61 percent. Meanwhile, exports grew by 6.51 percent, while imports surged by 7.95 percent.
The banking sector is also facing liquidity tightening as loan disbursement outpaces savings growth. According to Bank Indonesia’s (BI) money supply report for 2024, credit growth reached 10.39 percent, while third-party funds (DPK) only grew by 3.8 percent. The bigger issue is that the long-standing competition in the financial sector over the past decade now involves monetary authorities—Bank Indonesia (BI) and the Ministry of Finance (Kemenkeu). BI, with its Sekuritas Rupiah Bank Indonesia (SRBI) or Bank Indonesia Rupiah Securities, and the government, with its Surat Berharga Negara (SBN) or Government Bonds, have become major competitors to banks. This intensifying battle for third-party funds (DPK) could lead to a crowding out effect.
It occurs when the government borrows money to finance its expenditures, increasing demand for funds in the financial markets. As a result, interest rates may rise, making loans more expensive for the private sector, thereby reducing businesses’ ability to invest. Bankers have already been complaining about expensive liquidity. Towards the end of last year, major financial institutions such as BPJS Ketenagakerjaan (BPJSTK) and the Hajj Financial Management Agency (BPKH) pressured banks to raise their interest rates. A crowding-out tsunami is imminent, especially if Danantara starts issuing debt securities and competes with other debt issuers, including the government. The government intends to make Danantara its second financial engine after the state budget (APBN). By leveraging stateowned enterprise (BUMN) assets and dividends, Danantara will take on debt to fund government projects. If Danantara also issues bonds to attract domestic funds, the crowdingout tsunami will become even more real.
Currently, economic growth is at risk of stagnating at around 5 percent. In fact, it could slow down further to below 5 percent due to global geopolitical tensions and U.S. President Donald Trump’s economic policies, which have triggered a trade war, casting a dark shadow over the global economic outlook for 2025. Domestically, various social media hashtags criticizing Prabowo Subianto’s policies have emerged, amid weak consumer purchasing power and a wave of layoffs. To stimulate economic growth despite limited fiscal capacity due to the state budget deficit, the government is relying on SOEs as an alternative driver outside the state budget.
