Jakarta. Indonesia’s sovereign wealth fund, Danantara, is expected to play a pivotal role in attracting new investments and diversifying revenue sources beyond the state budget to fund key national development programs, an economist said on Monday.

According to Herry Gunawan, director of research firm NEXT Indonesia, Danantara has the potential to significantly increase Indonesia’s investment-to-GDP ratio, which currently stands at around 29 percent.

“A higher investment ratio is crucial for accelerating economic growth, as demonstrated by countries like China and India. With the right approach, Danantara could help push Indonesia’s investment-to-GDP ratio well beyond the current level,” Herry said.

Danantara’s Strategic Role in Economic Stability
Herry also highlighted Danantara’s potential to serve as a "reserve fund", ensuring economic stability while supporting government-led strategic programs without accumulating new debt -- a role similar to Singapore’s Temasek Holdings.

However, he stressed that strong corporate governance and risk management will be critical to Danantara’s success. The fund, projected to manage $900 billion in assets and investments -- primarily from state-owned enterprises (SOEs) -- must ensure that decision-making is conducted transparently and collectively, rather than being driven by individual interests.

Herry said Danantara’s governance framework must involve key stakeholders rather than relying on unilateral decision-making. More importantly, it must remain free from political influence, as intervention from political parties could derail its primary mission of boosting economic growth and improving public welfare.

Under its legal mandate, Danantara is required to raise $20 billion in initial funding. The fund will prioritize financing high-impact and sustainable projects across various sectors, including renewable energy, advanced manufacturing, mining industrialization, and food production.

Overall, Herry views Danantara as a crucial step in managing Indonesia’s long-term investments, enhancing economic competitiveness, and fostering sustainable growth.

“Danantara has the potential to be the future of Indonesia’s economy. It must be safeguarded by all branches of government -- executive, legislative, and judicial -- to fulfill its mission of economic progress and public welfare,” he concluded.

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