Indonesia’s Danantara Sovereign Wealth Fund (SWF) is gaining global attention as it ranks sixth among the world’s strongest sovereign wealth funds. However, concerns remain about its potential impact on foreign investment. While Danantara aims to drive sustainable economic growth, some investors worry that its focus on development over profit could deter capital inflows. The fund’s three-cluster structure may help address these concerns while balancing economic priorities.
Danantara SWF: A Strategic Investment Shift
Danantara SWF manages assets worth $983 billion, making it a major player in global finance. Unlike resource-based SWFs, Danantara prioritizes infrastructure and the digital economy, positioning Indonesia for long-term economic expansion. The government believes this structure will attract global investors while supporting national development.
Despite this vision, economist Wijayanto Samirin from Paramadina University warns that foreign investors may hesitate due to Danantara’s development-oriented approach. “The grand narrative of Danantara is to create jobs, prosperity, and welfare. While this is a good narrative, for foreign investors, it is a frightening one,” he stated, as reported by bisnis.com. This concern stems from the fact that Danantara will manage multiple state-owned enterprises (SOEs), many of which are already listed on the Indonesian stock exchange.
To balance national interests with investor confidence, economist Wijayanto Samirin has proposed structuring Danantara into three key clusters: profit-driven SOEs, public service SOEs, and ICU SOEs. Each plays a distinct role in his suggested framework for the fund’s overall strategy.
Profit-Driven SOEs: Boosting Market Competitiveness
The first cluster consists of SOEs that focus on market-driven profitability. This group includes companies in banking, mining, real estate, technology, telecommunications, and services. By prioritizing financial returns, these firms can generate steady revenue and enhance Indonesia’s market competitiveness.
Ensuring investor-friendly policies in this cluster is crucial. The recent 14.06% decline in the Jakarta Composite Index (IHSG) over six months highlights investor concerns. Samirin noted that almost all SOE stocks declined, except for PT Aneka Tambang Tbk. (ANTM). To prevent further capital flight, Danantara must demonstrate its ability to maintain market stability and profitability within this cluster.
Public Service SOEs: Strengthening National Infrastructure
The second cluster focuses on public service enterprises, which contribute to long-term national development. Companies in this category include PLN, Pertamina, pharmaceutical firms, energy providers, ports, and public transportation. These firms ensure essential services for Indonesia’s population and drive infrastructure growth.
Although these SOEs are not primarily profit-driven, they play a vital role in national stability. By ensuring efficient management, Danantara can support public welfare while maintaining investor interest in the broader economic ecosystem.
ICU SOEs: Restructuring Struggling Enterprises
The third cluster, known as the ICU (Intensive Care Unit) group, consists of troubled SOEs undergoing financial restructuring. This category includes state-owned construction firms such as Kimia Farma, Biofarma, Indofarma, and Krakatau Steel. These companies face financial distress but hold strategic value for Indonesia’s economy.
Samirin suggested that Danantara should manage this cluster carefully to avoid investor concerns. “With this structure, foreign investors will feel that their interests are being considered, and the public will also see their needs being addressed,” he said. By implementing effective recovery strategies, Danantara can help these SOEs regain financial health.
Can Danantara SWF Balance Growth and Investor Confidence?
Danantara’s approach presents both opportunities and risks. If managed effectively, the three-cluster structure can enhance economic growth while maintaining investor trust. However, concerns persist regarding the government’s influence over profit-driven SOEs.
The government insists that Danantara’s mission aligns with Article 33 of the Indonesian Constitution, which mandates that natural resources be managed for the people’s benefit. Rosan Roeslani, CEO of BPI Danantara, stated, as reported by antaranews.com, “The clear mission of Danantara is to enhance and accelerate Indonesia’s sustainable and inclusive economic growth.”
The Future of Danantara SWF
Danantara’s three-cluster model offers a strategic solution to balancing economic growth and foreign investment. By clearly distinguishing between profit-driven, public service, and ICU SOEs, the fund aims to attract investors while supporting national priorities. Ensuring transparent policies and effective management will be key to securing long-term success. If executed well, Danantara could strengthen Indonesia’s position as a major global economic player.
Source: antaranews.com, ekonomi.bisnis.com
Image: AFP/Bay Ismoyo
