Idiotopedia: Money Is Power, But Only If You Control the Flow

I had no plans to write this—seriously! However, after seeing several highlights from group WhatsApp messages about this case, it flowed into my mind—and bothered me! Lately, however, something has been making me unhappy. Many of the opinions I have read about Danantara are too pessimistic. Predictions of disaster are all over social media. People call it another 1MDB disaster or a huge plan for political leaders to steal state money.

On the other hand, government stories describe it as a huge step forward, a new financial idea that will make Indonesia the world's most important economy. But where is the middle ground? Where is the discussion based on logic and numbers showing how money flows, the risks, and whether this is a game-changer for the economy or just a high-stakes illusion?

So, here I am, trying to look like I know little about this #amI? I will leave investigative journalism to the pros, definitely not me, not in this Idiotopedia article. This isn't the only kind of sharing. Besides, it's not a political abuse—I don't want to be called pro- or anti-anything. Here is a simple, logical breakdown of how Danantara is set up, the opportunities it offers, and the risks that no one wants to talk about in a serious, in-depth way. Also, it's not financial assistance, and it's not the whole reality. For those who don't trust my opinion, you may talk to ChatGPT or Gemini. They'll probably give you a better answer than most "experts" or people with a lot of power pushing their ideas. And, if you want to know more, keep reading. If not, feel free to scroll down—I already feel bad writing something this long... only for the opening and disclaimer.

Let's start...

I've spent more than decades studying how money moves in financial systems. Yes, I have seen everything from complete scams to brilliant financial planning. For sure, though, money is useless if you can't control how it moves.... that's why I put that as the title of this article. That's the main idea behind Danantara, this brand-new sovereign wealth fund (SWF), which will oversee state-owned assets worth USD 900B (~IDR 15,000T). Well, on paper, combining the country's wealth to make businesses more profitable seems like a brilliant idea. But does the combination of current assets create real value, or is it merely an illusion or a potential overvaluation, as I previously discussed in my article? What makes me doubtful is this part. Unlike Norway's SWF, which was built on an oil surplus, or China's CIC, which used a trade surplus, Danantara is based on our existing SOEs, many of which are already heavily in debt, wasteful, and politically connected.

Logically, this means that Danantara doesn't have any new money to start with, or maybe I am wrong, am I? It's just the beginning after the fact. And since our SOEs have a history of being corrupt, inefficient, and having secret power battles, I wonder:

• Who benefits from this Danantara?
• How will the money flow?
• And what happens when things go wrong?

Let me start with some logical questions...

A. How will Danantara's business model work here?        

1. Danantara's Assets

Danantara was established to handle IDR 15,000T in assets, formed of:

- State-Owned Enterprises (SOEs) Equity: Pertamina, PLN, Telkom, Bank Mandiri, BRI, etc.

- Infrastructure and Properties: Toll roads, power plants, airports, ports, mining concessions, etc.

- Subsidiaries and Financial Commodities: Insurance firms, pension funds, venture arms, etc.

This looks massive at first glance. To be transparent, however, these are not cash reserves. They are assets that can't be easily sold because they are already tied up in debt (and problems). Meanwhile, Temasek was built through smart privatizations and smart capital allocation to compare with the logical benchmark in Singapore. Danantara, on the other hand, will have to borrow money against SOE assets to get investment capital.

2. The Money Flows

Let's say Danantara sells bonds worth IDR 2,000T (around USD 120B) to pay for its investments.

Logic 1: Issuing Debt

• Danantara sells bonds backed by SOE assets with an annual return of 7%, which is the current bond rate in Indonesia.
• Debt obligation: yearly interest payments of IDR 140T, which is around USD 8.5B.

Logic 2: Investment Allocation

Danantara is targeted to invest in several areas:

- Mega-Projects (~IDR 1,500T)

• Nickel downstreaming (hilirisasi) & EV battery factories.
• IKN infrastructure (as New Capital City - wannabe?)
• Toll roads, ports, airports.

- Strategic Acquisitions (~IDR 300T)

• Acquiring domestic (local) and foreign companies.
• Growing state-owned digital economy ventures.

- Liquidity Reserve and Speculative Investments (~IDR 200T)

• Maintaining reserves for economic volatility.
• (General thinking) Stock market, bonds, global assets.

Logic 3: "IF" clauses

• If investments yield an IRR of 8%, Danantara will only just break even after paying interest.
• Indonesia will have to take on more debt or sell assets if projects don't meet their targets.
• What's the risk? If returns are slowed down by corruption, incompetence, or political interference, Danantara could become a financial black hole, similar to the 1MDB scandal in Malaysia.

B. What could go wrong?        

Risk isn't always loud; sometimes, it sneaks up on you, hidden under stories about economic growth and social progress. But below the surface, Indonesia's most important assets—its SOEs—are staggering on the edge of life and/or failure.

1. Debt Circle and SOE Failure

• PLN has IDR 500T in debt, and Pertamina has difficulty paying its subsidies (well, you can check the news about this)
• If SOEs fail to perform well, Danantara might have to help them out, which would use up cash reserves (logical thinking)

2. Corruption and Political Interference

• The SOEs in Indonesia have been corrupt for a long time: Jiwasraya: IDR 16.8T scandal. Asabri's pension fund: IDR 23T, was lost.
• The same thing will happen again if Danantara's board doesn't have enough freedom.

3. Foreign Acquisitions and Risk

• If Danantara has financial issues, it will have to sell SOE assets (the same case as in 2002-2003, as they called SOE's privatization).
• Imagine that foreign businesses were in charge of PLN's power plants, Pertamina's oil fields, or Indonesia's telecommunication network.

C. Then, if Danantara fails, what are the possible scenarios?        

What happens when passion meets the realities of the current economy? This Danantara isn't just another state-owned business; it's a risky financial experiment that could change our economic path or show its weakness. However, in a market that rewards confidence and punishes weakness, even a tiny mistake can cause a chain reaction of bad decisions. The question isn't just whether Danantara will succeed or fail; it's also whether Indonesia is ready for the economic chaos that comes after a big bet goes wrong. Below is based on my personal view:

1. The market senses weakness --> Danantara doesn't meet its return on investment targets, which increases bond yields.

2. Emergency debt issuance --> The government issues more bonds to pay Danantara's interest obligations.

3. Panic sale starts -->?As mentioned above, Indonesia is pressured to privatize and sell considerable SOE assets.

4. IMF bailout scenario? Indonesia's debt is getting too high, so other countries have to step in and help (another devilish circle).

D. My note:        

You can't lie with numbers, but how you use them can change the reality. As a sovereign force that can turn state-owned companies (SOEs) into globally competitive giants, Danantara is the engine that will change our economy. Indonesia has a huge untapped potential worth about $1.3T in areas like energy, infrastructure, and technology (yes, I did my research as I attached that in my PPM document—Private Placement Memorandum). The assets could bring in foreign capital and drive exponential growth through a well-run state investment company. Improving the efficiency of a few big SOEs by just 5-10% could bring in hundreds of billions of dollars over the next decades, starting a cycle of investment, growth, and national wealth that would last forever.

Adding reality to this idealistic view would be good, though. Are the probabilities of success really that good? At most, less than 30% of people think Danantara will reach its full potential. This is based on past SOE performance, systemic deficiencies, and bad governance. How come? The real fight isn't over numbers but over who has power over them. Yes, this story is not new to us! The fall of Jiwasraya worth USD 1.1B. Asabri lied about his pension fund and lost USD 1.5B. Not by chance; these were systematic robberies passed off as bad capital management. Once a state-owned enterprise (SOE) gets too big, it draws political interest. When power and money collide, economic rationality typically takes precedence. Things get even more important with Danantara. You shouldn't think of this as just another SOE; it's a command center for national assets that can change ownership, manage cash flows, and set economic policy without the people having a direct say.

Now, allow me to continue this discussion until its conclusion is reached. Once the books don't match, what will happen if Danantara does what other unchecked SOEs have done? Who will take on the costs? Are they going to take action and spend the public's money? As part of a "national rescue package," will taxpayers have to pay (MORE) for yet another bailout? Otherwise, will Indonesia have no choice but to sell off its most important assets one by one to foreign businesses until even national authority is turned into a business deal?

Danantara might fail, but that isn't what scares people. Failing might not be a flaw, but the plan is scary. We are not seeing an economic revolution; instead, the people already in charge are carefully redistributing wealth to themselves. This is what the future holds for Danantara if poor management, political interference, and elite-driven goals govern it. There is no going back once assets or ownership have changed... who will scream—people in the DPR? ... Wake up, Alfred! Time for an easy life and slow living!

Then, my final blow now: Is a big economic change about to happen? Or have we just walked into the greatest financial entanglement in our country, one that no one will see coming until it's too late?

Stay healthy, happy, and sane! Enjoy the journey...