Jakarta. Indonesia’s sovereign wealth fund Danantara marked its first anniversary on Feb. 24 with an ambitious mandate: oversee the country’s vast state-owned enterprise (SOE) portfolio and steer multibillion-dollar strategic projects.

President Prabowo Subianto has consistently positioned Danantara as a cornerstone of his economic agenda. Speaking to American business leaders in Washington last week, he said all state-owned assets had been consolidated under Danantara to accelerate investment. “We need more investment and Danantara will be a key engine in this movement,” he said.

The fund aims to expand assets under management to $2.7 trillion by 2030, up from roughly $900 billion today. Over the past year, Danantara has drawn attention for installing foreign executives at flag carrier Garuda Indonesia, taking over flood-linked assets in Sumatra, and exploring a stake in the Indonesia Stock Exchange (IDX).

Chief executive Rosan Roeslani said Danantara has broken down siloed operations within SOEs, promoting transparency and value creation. Yet expectations remain high. Prabowo has set a target of 7% return on assets. Investment head Pandu Sjahrir said the fund would gladly accept the challenge as it “searches for projects that can give higher returns with the same impact while improving standards.”

Consolidation Push
Danantara argues that many SOEs compete internally by selling similar products. To address this, it is pursuing mergers and rationalization, including a potential tie-up between Pelita Air and Garuda, and plans to consolidate seven state construction firms into three.

The broader objective is to reduce the number of SOEs from about 1,000 to roughly 200 to improve efficiency. “Many of our SOEs are small-scale and loss-making. Consolidation will raise market capitalization through better efficiency and profitability,” chief operating officer Dony Oskaria said, pledging that workers would not be adversely affected.

SOEs account for around 30% of total market capitalization on the IDX, making their performance critical to Indonesia’s capital markets.

Multi-Billion-Dollar Agenda
Danantara is leading a $5 billion waste-to-energy program across 33 cities, which it says could generate a tenfold multiplier effect and create 3,500 jobs. The fund is also developing an Indonesian Hajj Village in Mecca, securing an operating hotel and land near the Grand Mosque for $500 million, while bidding for additional plots in competitive auctions.

In the industrial sector, Danantara has launched six downstream processing projects — from bioethanol to alumina refining — worth a combined $7 billion, with 14 additional projects valued at up to $19 billion in the pipeline. Market volatility has also opened the door for a potential 30% stake in the IDX, though such a move would depend on the exchange’s planned demutualization.

Beyond infrastructure, Danantara has partnered with UK-based chip designer Arm to train 15,000 Indonesian engineers in semiconductor design, an initiative Jakarta hopes could attract global players such as Nvidia and SK Hynix.

Waiting for a Breakthrough
Despite its scale, critics say Danantara has yet to deliver a defining success. Herry Gunawan, an economist at NEXT Indonesia Center, described its first year as “far from satisfying,” noting that its most visible actions have been capital injections into struggling SOEs such as Garuda and Krakatau Steel.

“It is still difficult to see clear breakthroughs,” Herry said, pointing to weakening SOE performance. He cited modest 0.9% year-on-year profit growth at Bank Mandiri in 2025 and a 6.6% earnings contraction at BNI, both traditionally major dividend contributors.

He also warned that consolidation may not automatically eliminate inefficiencies. In plantations and forestry, entities such as PTPN, Inhutani and Perhutani overlap with newer vehicles like Agrinas. In mining, he added, the presence of MIND ID sits uneasily with plans to establish Perminas to manage seized gold assets from Agincourt Resources in North Sumatra. “This kind of overlap undermines efficiency,” he said.

While Danantara’s asset base is larger than Singapore’s Temasek and Malaysia’s Khazanah Nasional combined, critics argued it could also be the least efficient due to overlapping SOE structures. Senior economist Josua Pardede said the 7% ROA target could be achieved if Danantara strengthens asset quality, applies strict discipline in investment selection, and improves governance.