Jakarta (AFP) – Indonesia on Monday launched a new sovereign wealth fund that will aim to manage state assets worth more than $900 billion as President Prabowo Subianto looks to turbo-charge growth in Southeast Asia’s biggest economy. The recently inaugurated leader has pledged to take the archipelago’s annual growth from five to eight percent, ordering billions of dollars worth of cuts across government that last week sparked the first protests of his rule.
Prabowo signed a document at the presidential palace in Jakarta initiating the new fund known as Daya Anagata Nusantara, or Danantara, which is modelled on Singapore’s investment arm Temasek and received approval this month in a parliament dominated by the president’s ruling coalition. “I, as the president of the Republic of Indonesia, sign…the government decree…about the organisation and governance of the Investment Management Body, Daya Anagata Nusantara,” he said at the palace. “It is not just an investment body, it is an instrument for national development that will optimise the way we manage our wealth. We are committed to being a developed nation.”
Danantara will take control of government holdings in state companies, with an initial budget of $20 billion, according to state news agency Antara. Investment Minister Rosan Roeslani has been picked as the chief executive of the fund, Coordinating Minister for Economic Affairs Airlangga Hartarto told reporters after the signing. The government has not specified which state-owned companies will fall under control of the fund, but Prabowo has said he wants it to manage more than $900 billion in assets. As of 2023, government data showed state-owned enterprise assets were worth $637.5 billion, much lower than Prabowo’s target. He will use the fund as an investment vehicle and said it would “be invested in 20 or more high-impact national projects” this year. Prabowo said the initial funding would be used for projects in nickel, bauxite, copper, food production, renewable energy, and building an AI centre, oil refinery, and petrochemical factory.
– ‘New era’ –
Danantara will be Indonesia’s second sovereign wealth fund, after the Indonesia Investment Authority, which was launched in 2021 and holds $10.5 billion in assets. “This event marks a new era in the transformation of strategic investment management in the country,” presidential secretariat spokesman Yusuf Permana said in a statement Sunday. “It is also part of the government’s commitment to realising…a grand vision aimed at elevating Indonesia’s economy to a higher level through sustainable and inclusive investments.”
Prabowo’s cuts to fund Danantara and an ambitious multi-billion-dollar free lunch programme have stoked student-led protests by thousands across Indonesia’s cities, including the eastern city of Makassar, where police fired tear gas. Austerity measures announced by Prabowo in late January sparked the rallies last week, underpinned by a social media movement known as “Dark Indonesia.” The fund will also report directly to Prabowo, and some experts have cautioned that it will need proper monitoring and management; otherwise, it could raise governance concerns.
Danantara’s launch was also met with some opposition on social media by Indonesians angry at the government’s handling of finances in a country long known for red tape and corruption. “The state can’t even manage life insurance properly. How can it manage a Danantara-style Sovereign Wealth Fund?” asked one user on X.
© 2024 AFP
