• Indonesia has inaugurated its new sovereign wealth fund, Danantara, with a target of managing assets exceeding US$900 billion.
• The fund will start with an initial investment budget of US$20 billion targeting over 20 strategic projects.
• President Prabowo Subianto aims to enhance economic growth from 5% to 8% while facing public skepticism and governance concerns.

On February 24, 2025, Indonesia launched its ambitious sovereign wealth fund, known as Danantara, which is designed to manage over US$900 billion in state assets with the objective of boosting economic growth in the Southeast Asian nation. President Prabowo Subianto officially inaugurated the fund during a ceremonial event at the presidential palace in Jakarta, aimed at consolidating government holdings in state-owned enterprises (SOEs) and driving Indonesia toward developed economy status.

Danantara will initially direct US$20 billion into a wide range of projects across sectors such as renewable energy, food production, mineral processing, and artificial intelligence. This ambitious fund, modeled after Singapore's Temasek, is expected to channel significant investments into Indonesia’s lagging sectors to create jobs and promote sustainable development. Prabowo highlighted that “These sectors will determine our future, our resilience, and our nation’s independence,” at the launch event.

Despite its lofty goals, analysts express skepticism regarding Danantara’s governance structure, which would place the fund under direct presidential oversight in a nation grappling with perceptions of inadequate transparency and corruption risks. Prabowo's administration has already faced protests regarding budget cuts that fund his free meals initiative for students as well as Danantara, led by students concerned about the potential misuse of public funds. The protests, collectively dubbed "Dark Indonesia," have marked a challenging start for Prabowo's leadership.

The fund's leadership will include a mix of seasoned politicians and business figures, with Investment Minister Rosan Roeslani set to head the new entity. This organizational structure aims at enhancing operational efficacy while grappling with concerns over potential executive misconduct as the government transfers significant oversight and control to Danantara.

Importantly, observers have cautioned that proper oversight mechanisms will be crucial for maintaining investor confidence and avoiding governance pitfalls reminiscent of previous investment scandals, such as the 1MDB case in Malaysia. “This is a new body, so people will question everything,” warned economist Eko Listiyanto, emphasizing the need for clear accountability and operational transparency.

As Danantara embarks on its journey to reshape Indonesia’s economic landscape, its success will depend significantly on balancing ambitious investment strategies with a strong commitment to governance and public trust. Current projections suggest it will be a challenging but vital project for Indonesia's economic future.

For further details, please refer to the original articles at Jakarta Post, Reuters, and Channel News Asia.