The establishment of Danantara, a Sovereign Wealth Fund (SWF), signifies a significant shift in the management of state-owned assets in Indonesia. In past times, state-owned enterprise (SOE) earnings were sent straight to the national budget without any consideration for long-term growth. Following the example of Temasek Holdings (Singapore) and Khazanah Nasional (Malaysia), Danantara is now a vehicle for strategic investment with the passage of Law No. 1 of 2025. With assets worth over USD 900 billion, Danantara is well-positioned to grow into one of the biggest and most significant SWFs globally.
Efficiency, Governance, and Global Lessons
Danantara streamlines processes and gets rid of unnecessary structures by combining SOEs under a single professional holding company. As demonstrated by Temasek’s development, this integration increases transparency and establishes a single investment platform. The following are guaranteed by the adoption of international norms like the Santiago Principles:
- Clear separation between government ownership and fund management
- Transparent and auditable fund management
- Long-term investment orientation
- Institutional credibility in the eyes of international investors
By selling off Gencos and managing the Keppel-Sembawang case, Danantara also hopes to emulate Temasek’s achievements in strategic reorganization and investment.
Danantara has significant obstacles in spite of its potential. The dangers of political meddling, opposition from legacy stakeholders, and the need for reliable legal frameworks are similar to the difficulties seen in SWF mismanagement situations like 1MDB in Malaysia and TWF in Turkey. Ensuring that Danantara adheres to clear governance standards and prioritizes economically sound, future-oriented investments will be key to realizing its role as a strategic driver of Indonesia’s national development.
