JakartaPost-Feb 26
The wealth fund is committed to optimizing the role of SOEs as the backbone of national development, contradicting President Prabowo’s promise to have the private sector lead the way. t has structured the fund appears to make it a direct competitor of private companies, which could discourage them from making new investments. The official introduction document of Danantara stated that the wealth fund is committed to optimizing the role of state-owned enterprises (SOEs) as the backbone of national development. That vision may contradict President Prabowo Subianto’s statements in the past calling for a bigger private sector role, as he championed their efficiency, innovation and expertise. “I have said many times that the government will handle the important matters […] concerning the protection of the people, among other things. But what the private sector can do, the private sector [must] develop. The private sector must do it all,” Prabowo said in January, stressing “Indonesia Incorporated” concept. Danantara was launched by the President on Monday, and it will consolidate seven major SOEs in the energy, mining, telecom and banking sectors, but the agency said SOEs are expected to join the fund by the end of March, cementing its position to manage US$900 billion in assets. Armed with $20 billion in initial capital, the President has envisioned Danantara as a driving force that will raise the country’s economic growth from 5.03 percent last year to 8 percent by 2029. The fund is set to focus on a wide range of strategic sectors, from the downstream nickel, bauxite and copper industries to artificial intelligence data centers, oil refineries, petrochemicals, food production, aquaculture and renewable energy. Riandy Laksono, a researcher at the Center for Strategic and International Studies (CSIS), cautioned that Danantara’s focus on domestic projects could trigger a “crowding out” effect, squeezing private players out of the competitive landscape. “This could lead to a decline in overall investment,” Riandy warned. Deni Friawan, a CSIS researcher warned, “there’s uncertainty about which sectors the fund will prioritize… Will it pursue profitable sectors with quick returns [at the risk of crowding out private players] or invest in areas with little financial return like infrastructure development in remote regions such as Papua?” Read more at:
https://www.thejakartapost.com/business/2025/02/26/danantara-may-discourage-private-sector-investment.html.
