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Indonesia is on the brink of a significant transformation in its state-owned enterprise (SOE) management with the establishment of the Daya Anagata Nusantara Investment Management Agency (BPI Danantara). The agency, which has reached its final preparatory stages, represents an ambitious attempt to consolidate and streamline the country's most important state-owned companies.

The new investment authority, led by Muliaman Hadad, a former chairman of the Financial Services Authority (OJK), aims to bring together seven major state-owned enterprises with combined assets of approximately 8.9 quadrillion rupiah (US$570 billion). This includes prominent companies like Bank Mandiri, BRI, BNI, Telkom Indonesia, Pertamina, PT PLN, and MIND ID, which collectively contribute nearly 90 percent of SOE dividend payouts.

Inspired by Singapore's Temasek Holdings, Danantara seeks to create a more efficient approach to managing state wealth. However, the Indonesian model differs significantly from its Singaporean counterpart. While Temasek operates as a private investment company with clear separation from political processes, Danantara will be established through statutory law, with officials appointed and potentially dismissed by the sitting president.

President Prabowo Subianto has been closely monitoring the agency's development, expressing a clear desire to reduce Indonesia's reliance on foreign funding for government projects. The investment minister, Rosan P. Roeslani, has already reported interest from friendly countries like the United Kingdom and the United Arab Emirates in supporting Danantara's operations.
The agency's approach is distinctly "domestic-oriented," focusing on attracting foreign investment while prioritizing local development projects. Muliaman Hadad emphasizes that Danantara will serve as an "inducer" for foreign investors, helping to finance critical long-term projects that traditional bank loans cannot support.

Interestingly, the agency will need to carefully navigate the management of state-owned enterprises with public service obligations. Companies like Pertamina and PLN, which provide subsidized fuel and electricity, will continue their essential services. Hadad has promised to develop specific performance indexes that balance commercial metrics with public service improvements.

This initiative comes at a critical time for Indonesia, a country where state-owned enterprises contribute approximately 60 percent of the gross domestic product. The total value of SOE assets stands at around 10.40 quadrillion rupiah (US$655.3 billion), underscoring the significant role these companies play in the national economy.

As Danantara moves forward, questions remain about its precise operational structure and the extent of its authority. Hadad himself acknowledges the journey is ongoing, comparing it to a path where direction can change, but the ultimate destination remains clear.
The establishment of Danantara represents a potentially transformative moment for Indonesia's economic management, signaling a more strategic and consolidated approach to state-owned enterprise investment and development.

Sources: 

https://indonesiabusinesspost.com/insider/legal-umbrella-for-bpi-danantara-to-be-completed-soon/ 

https://www.thejakartapost.com/business/2024/11/28/prabowo-wants-danantara-to-drive-local-funding-for-govt-projects-minister.html

https://www.thejakartapost.com/opinion/2024/11/28/danantara-an-soe-superholding-la-temasek.html 

https://www.thejakartapost.com/business/2024/11/25/danantara-to-position-itself-as-more-domestic-focused-wealth-fund-head-says.html 

https://en.tempo.co/read/1943736/pln-presents-their-main-task-to-danantara-supporting-8-percent-economic-growth 

https://www.liputan6.com/bisnis/read/5795027/muliaman-hadad-panggil-direksi-bumn-percepat-transisi-ke-danantara?page=4 

https://money.kompas.com/read/2024/11/09/101000726/danantara-segera-dibentuk-bikin-bumn-lebih-lincah-