Indonesian President Prabowo Subianto said the nation’s new sovereign wealth fund will start on Feb 24 and invest in a range of industries as he steps up efforts to boost growth to his goal of 8 per cent.
An “initial evaluation” indicates that the fund will have more than US$900 billion in assets under management, Prabowo said in an online address to the World Governments Summit. He didn’t give a timeline for the fund to achieve that scale of assets, which is higher than earlier indications.
Daya Anagata Nusantara, known as Danantara, will invest in projects including renewable energy, advanced manufacturing, downstream industries and food production, Prabowo said in the speech, which was posted online on Thursday evening.
“The fund, which will be launched on Feb. 24, will invest our natural resources and state assets into sustainable, high impact projects across sectors,” Prabowo said. “All these projects will contribute to achieving our committed target of 8 per cent economic growth.”
The president didn’t give specifics, or outline how Indonesian state assets will be progressively shifted to the fund. If it does exceed US$900 billion in assets, Danantara would rival some of the world’s largest sovereign wealth funds, including Singapore’s GIC, which has been in business for decades and holds a global portfolio of varied assets.
Norway’s Norges Bank Investment Management has roughly US$1.8 trillion of assets.
South-east Asia’s largest economy has been ramping up efforts to attract foreign investment and reduce its reliance on raw commodity export by developing value-added industries. Danantara is expected to play a key role in advancing Prabowo’s economic agenda.
The announcement comes just over a week after parliament passed an amendment to the state-owned enterprises law, paving the way for the fund to oversee state-owned companies, their operations, investments, and dividends. Initial funding may come from at least US$60 billion in cash, state assets, and government-owned shares.
Prabowo has yet to provide more details on Danantara’s structure or investment strategy, but the fund is expected to report directly to the president and be overseen by a supervisory board. A regulatory framework is expected soon to clarify its operations. The fund is currently led by Muliaman Hadad, a former deputy governor of Bank Indonesia. BLOOMBERG
