Indonesia has launched the Danantara fund, appointing renowned billionaires like Ray Dalio and Jeffrey Sachs as advisors, stirring varied reactions amid political and economic challenges.
Creation of Danantara Fund
The Danantara fund was initiated by Indonesia's President Prabowo Subianto in February, consolidating the country's state-owned enterprises into a massive organization. The fund is expected to enhance economic growth by investing in key businesses and projects. The appointment of billionaires Ray Dalio and economist Jeffrey Sachs as advisors has drawn significant attention to the venture.
Asset Evaluation and Market Impact
According to reports, Indonesia's state-owned enterprises hold assets worth over $900 billion in various sectors like banking, energy, and telecommunications. The largest of these are valued at $570 billion, comprising about 40% of the national GDP. However, the asset concentration and potential political interference have raised investor concerns.
Budgetary Implications
The Danantara fund pledges to invest $20 billion in sectors such as food, energy, mineral processing, and AI. However, the diversion of SOE dividends to the fund leaves a gap in the state budget, exacerbating challenges in financing major policies and development projects.
The Danantara fund presents both economic opportunities and debates surrounding its governance and management. The inclusion of international advisors draws attention and raises questions about the future of Indonesia's economic policy.
