Quick Take: Danantara Delay

[Note: My Quick Takes are my personal commentaries and do not represent IWIRC Indonesia. I have moved in February 2025 to Acrostics Asia.]

By Eveline Danubrata

Danantara—Indonesia’s version of Singapore state investor Temasek—was announced to the world with fanfare last year, but the headlines gradually fizzled out as its official launch kept being pushed back.

When asked about the reason for the delay, Deputy Finance Minister Thomas Djiwandono told a conference in Jakarta last week that President Prabowo Subianto wants a “clearer regulatory framework” for Danantara and its formation is “more complicated” than expected.

Djiwandono—who’s the nephew of the president—did not specify the legal aspect, but said that the issue is not the transfer of assets because from the Finance Ministry’s perspective, it has all along given the authority to manage assets to state-owned enterprises (SOEs) and it just has to transfer that authority to Danantara.

At the same event, Djiwandono said that Danantara’s aim is to pool SOE assets and seek investors, such as from Abu Dhabi and Qatar, for a project or an existing business. “The point is we have such diverse (assets), why don’t we combine these commercial things to create a huge strength so it can be leveraged,” he said.

Danantara’s raison d’etre is pretty clear by now. As I wrote in November 2024, the architects of Danantara were likely gunning for a multiplier effect so they can fund the president’s spending plans. If there are limits to how much the state can borrow and each SOE has incurred its own debt, Danantara’s blueprint is probably to put the most attractive SOEs together and leverage up that collective basket. On paper, a bigger economic scale should translate to a cheaper cost of funds.

So what’s exactly holding up Danantara’s formal establishment?

I warned in December 2024 that to create a solid legal umbrella, Danantara’s architects may have to revise the existing Indonesian laws (Undang Undang), particularly one that governs SOEs. These are fundamental laws that are higher than government regulations (Peraturan Pemerintah) or presidential regulations (Peraturan Presiden) in Indonesia’s legal hierarchy.

In a nutshell, if Danantara’s legal foundation is weaker than Undang Undang, then the people who are responsible for it might become vulnerable to potential attacks in future. It boils down to who would actually be willing to put their necks on the line.

The latest news indicates that Danantara’s architects would rather be safe than sorry. SOE Minister Erick Thohir told reporters this week that the parliament is proposing a revision to the SOE law (Undang Undang Badan Usaha Milik Negara) to pave the way for the establishment of Danantara.

The draft law will lay out the organizational structure and management of Danantara, Thohir said, adding that it was the initiative of the parliament, not his ministry. It’s unclear how long it will take, but the parliamentary commission overseeing SOEs (Komisi VI) said that it will accelerate the discussion of the bill.

What’s the likelihood that Danantara will clear the hurdles and come into being? Two friends briefed on the matter said that the president’s camp recognized that the money for his ambitious projects has to come from somewhere – and as I pointed out, Danantara was designed precisely to be Indonesia’s new debt engine.

When there’s a will there’s a way, though I’d still caution that anything can happen in Indonesia.