Indonesia’s four-week-old sovereign wealth fund, Daya Anagata Nusantara (Danantara), is setting an ambitious goal to generate $8 billion annually in dividends from state-owned enterprises (SOEs), a 60% increase from the current $5.1 billion.

According to Chief Investment Officer Pandu Patria Sjahrir, the fund will focus on high-return investments and professionalizing SOEs to achieve this target. "Every year, we [will aim to] receive dividends of at least $8 billion," Sjahrir told Nikkei Asia, indicating the long-term vision of generating even greater financial returns.

Danantara as a Super Holding Company

Danantara now manages 47 SOEs with combined assets totaling $900 billion. Unlike traditional state management, Danantara will act as a super holding company, overseeing investment strategies while allowing for private co-investments.

"Think of us as a financier," Sjahrir explained. "We’re investors who invest in projects and can collaborate with operational partners." SOE dividends will be reinvested, ensuring long-term economic growth while financing government programs.

Sjahrir envisions that within five years, Danantara could accumulate $40 billion in investment capital.

Market Concerns and Investor Confidence

Danantara’s launch comes amid market uncertainty surrounding President Prabowo Subianto’s economic policies. Indonesia’s benchmark equity index has declined by 20%, while the rupiah has fallen over 3%, reaching its lowest level since the 1998 Asian financial crisis.

Despite concerns, Sjahrir remains confident. "After we explain Danantara to investors, they get excited. This is such a big change [that] disrupts the status quo," he said, acknowledging the challenges in gaining investor trust.

Investment Focus and Risk Management

Danantara’s strategy will emphasize prudent risk management, targeting high-value investments averaging $500 million. Unlike the Indonesia Investment Authority (INA), which focuses on smaller projects, Danantara will primarily invest within Indonesia, focusing on downstream industries, energy security, food security, and digital infrastructure.

"We have to make money ... after that, we also want to bring in partners that add value, such as technology and knowledge," Sjahrir explained.

Global Figures Join Danantara

The fund has attracted high-profile global advisors, including:

• Ray Dalio (American billionaire investor)
• Thaksin Shinawatra (Former Thai Prime Minister)
• Jeffrey Sachs (Columbia University economist)
• Febriany Eddy (Former CEO of Vale Indonesia)

These appointments reflect Danantara’s global outlook in securing expertise and strategic partnerships.

SOE Reforms and Reducing Political Influence

One of Danantara’s key missions is to professionalize SOEs, reducing their political influence. "That’s probably the most important because [SOEs] can behave like a full economic actor, not a state actor," Sjahrir emphasized.

Danantara also plans to redirect SOE dividends into an investment fund, rather than immediately allocating them to the state budget. This shift aims to create sustainable, long-term economic growth.

Addressing SOE Challenges and Consolidation

Danantara faces major hurdles, as many SOEs are struggling with significant liabilities, including state-owned construction firms and electricity provider PLN.

Sjahrir stated that underperforming SOEs may be restructured, consolidated, sold, or liquidated. "If [an SOE is] already at some scale, then we scale it up, or we should find strategic investors," he explained.

Long-Term Outlook and Risks

Experts warn that raising SOE dividends too quickly may create short-term financial pressure on profitable state-owned banks, Telkom, and Pertamina. Mohammad Faisal, executive director at the Center of Reform on Economics (CORE), advised that SOE governance improvements should be prioritized first.

Danantara’s ultimate goal is to transition Indonesia from a consumption-driven economy to an investment-driven model, supporting the government’s target of doubling investment growth to 10% annually.

PHOTO: BERITAINVESTOR.ID

This article was created with AI assistance.