New Indonesia sovereign wealth fund to invest $20 billion in projects

JAKARTA (Reuters): Danantara Indonesia will invest $20 billion in a wide range of projects from metal processing to artificial intelligence, President Prabowo Subianto said on Monday, as he launched the country’s new sovereign wealth fund.

At a lavish ceremony, Prabowo formally launched the Daya Anagata Nusantara Indonesia fund, or Danantara Indonesia, which is expected to manage more than $900 billion worth of assets to help drive development in Southeast Asia’s largest economy and fulfil his promise of boosting growth to 8%, from about 5% now.

Danantara will be the country’s second sovereign wealth fund after the Indonesia Investment Authority and will operate separately, its chief said.

Danantara will hold government stakes in state firms and is intended to operate like Singapore’s investment arm Temasek, but it faced criticism from thousands of student protesters last week, who raised concerns over potential mismanagement.

“Danantara Indonesia is a strategic and efficient solution to optimise state-owned enterprises. Not only are we going to invest state companies’ dividend payments into industries that support long-term growth, but we will also transform our state companies to become world leaders in their respective sectors,” Prabowo said.

In its first round of investments, Danantara will put $20 billion into more than 20 projects in nickel, bauxite and copper processing, artificial intelligence development, oil refineries, renewables, as well as food production, the president told hundreds of attendees, including foreign dignitaries, business people and politicians.

Prabowo pledged transparency in the fund’s management, saying Danantara could be “audited any time by anyone because it is owned by the people”.

Danantara will form two units, a holding company that oversees state companies’ operations and an investment arm, Prabowo’s spokesperson said.

Investment Minister Rosan Roeslani, a former businessman who led Indonesian investment firm Recapital Group, will also serve as Danantara’s chief executive, while Pandu Sjahrir, managing partner at asset management firm Indies Capital and founding partner of venture fund AC Ventures, was named head of Danantara’s investment arm.

Rosan confirmed the Indonesia Investment Authority will operate separately from Danantara. INA currently manages $10.5 billion worth of assets, including funds from co-investors, such as Dutch pension fund APG Asset Management and Abu Dhabi Investment Authority, according to its website.