Indonesia launches $1.2 trillion sovereign wealth fund

It will serve as an investment vehicle and holding company for state-owned entities

- Wahyudi Soeriaatmadja

JAKARTA - Indonesia launched its new sovereign wealth fund Danantara on Feb 24, the latest initiative by President Prabowo Subianto to deliver on his ambitious economic growth target of 8 per cent within his first term.

Danantara, short for Daya Anagata Nusantara, will serve as an investment vehicle and holding company for state-owned entities (SOEs). It hopes to boost these companies' roles in driving the national economy.

"Danantara is not just a mere institution that manages investment.

It has to serve as an instrument that drives national development that will optimise our efforts in managing the wealth of our nation," President Prabowo said in his speech to launch the fund at the presidential palace on Feb 24.

The SOES that will be placed under Danantara are three banks Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia as well as state electricity utility Perusahaan Listrik Negara, oil and gas company Pertamina, Telkom Indonesia, and Mining Industry Indonesia, which owns gold, coal and nickel mines.

As such, Danantara would have about US$900 billion (S$1.2 trillion) in total assets under management, making it one of the world's largest sovereign wealth funds and propelling it to fourth place globally, ahead of Saudi Arabia and Singapore.