Indonesia’s funding plan for new investment arm sparks backlash, transparency concerns

Critics warn of potential corruption and unchecked political influence in managing state-owned assets via new sovereign wealth fund Danantara

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Indonesia’s President Prabowo Subianto. Photo: AFP

Published: 12:00pm, 19 Feb 2025Updated: 2:57pm, 19 Feb 2025

Indonesia’s plan to bankroll its new sovereign wealth fund, Danantara, through sweeping austerity measures has sparked a public backlash and concerns about transparency, as critics warn of potential corruption and unchecked political influence in managing the nation’s vast state-owned assets.

President Prabowo Subianto revealed on Saturday that 750 trillion rupiah (US$44 billion) would be raised through public sector budget cuts, a move that will affect spending across ministries and agencies.

These cuts, aimed at streamlining government operations, will limit expenditures on everything from official travel and meetings to disaster prevention equipment and civil servants’ wages. A portion of these savings, 325 trillion rupiah, will be channelled into the new fund’s investment arm.

Daya Anagata Nusantara, or Danantara, is Indonesia’s new sovereign wealth fund that will be launched next Monday with the goal of generating higher dividends from the country’s sprawling state-owned sector and attracting foreign investments.

Indonesia’s first sovereign wealth fund, named Indonesia Investment Authority and set up in 2021, managed less than US$10 billion in assets as of 2023.

The new fund would have an initial capital of 1,000 trillion rupiah but would eventually manage more than US$900 billion in assets, Prabowo said on February 13.