Indonesia is on the brink of launching a significant investment body called BP Danantara (Badan Pengelola Investasi Daya Anagata Nusantara), which is designed to optimize the management of state assets outside the national budget. Initially set for a launch on November 7, 2024, the unveiling has been delayed due to President Prabowo Subianto’s overseas visit. The formal introduction will take place after the president returns, but the plans for this new institution have already generated considerable interest in the business and financial community.

BP Danantara’s primary mission is to oversee Indonesia's sovereign wealth fund (SWF) and manage its vast assets, which include investments from various state-owned enterprises (SOEs). As highlighted by Muliaman Darmansyah Hadad, who was appointed head of BP Danantara, the goal is to create a more efficient, integrated management system for Indonesia’s state assets, aiming to support the country’s economic growth and improve its global competitiveness.

BP Danantara’s establishment seeks to bridge the gap in managing Indonesia’s public wealth, expanding its scope far beyond the current management of the Indonesia Investment Authority (INA). Unlike INA, which functions primarily as a sovereign wealth fund, BP Danantara will take a more comprehensive approach, consolidating assets from several large SOEs, including Bank Mandiri, Bank BRI, PLN, Pertamina, BNI, Telkom Indonesia, and MIND ID. This initiative aims to not only streamline the management of state assets but also accelerate Indonesia’s economic growth over the next five years.

The overarching goal of BP Danantara is to enhance the efficiency of Indonesia’s investments by optimizing national resources and channeling them into sectors that will increase the nation’s global competitiveness. Muliaman points out that this new body will closely follow the success model of Temasek, Singapore’s highly successful SWF, which has been recognized for its effective asset management and contribution to national wealth.

BP Danantara is poised to manage a massive portfolio, starting with assets from the INA and seven key SOEs, valued at USD 600 billion (IDR 9,504 trillion). This will position the fund as the fourth-largest SWF globally. The institution aims to grow this initial asset pool to USD 982 billion in the future, which would further bolster Indonesia’s stature on the world stage.

The assets managed by BP Danantara will not be limited to financial investments but will also involve strategic infrastructure and resource development projects that are crucial for Indonesia’s long-term economic sustainability. This comprehensive approach is expected to elevate the management of national resources and improve Indonesia’s ability to attract both local and international investments.

The creation of BP Danantara is supported by a new legal framework that includes a revision of the existing SOE laws to grant the agency the authority to operate independently. This legal backing is critical for ensuring the institution’s autonomy in managing investments without being constrained by the limitations of the state budget (APBN). The Indonesian government has already started coordinating with various ministries to ensure the new body can operate swiftly, with an operational budget coming from the 2025 national budget.

The formation of BP Danantara is a critical step toward enhancing Indonesia’s investment climate and ensuring that the country can better leverage its vast natural and financial resources. The hope is that, like Temasek, BP Danantara can generate high returns for the state, contribute to economic growth, and support key national development goals.

KOMPAS.COM