Jakarta. Sovereign wealth fund Danantara is urging state firms to be honest in their financial statements amid ambitious business overhauls.

The agency, which now oversees all state-owned enterprises (SOEs), is expected to raise annual dividends to up to $10 billion over the next five years. The seven-month-old Danantara has been eyeing major changes to SOEs, ranging from mergers to board shake-ups. In the process, Danantara doesn’t want businesses to cook the books or make their financial results look better than they actually are.

“In this first year, we are making complete evaluations [of our SOEs]. … We [Danantara] have urged all SOEs to present their financial report as they are. … Don't even think of inflating your profit,” the fund’s chief executive officer Rosan Roeslani said in Jakarta on Thursday.

Rosan acknowledged that such honesty could lead to some declines in their upcoming unaltered financial results, including those of the big companies.

"No financial hanky-panky. That should be a thing of the past," Rosan said.

As Danantara urged firms to be transparent, the fund intends to optimize state assets. He added: "We will create more value in the future. ... Hopefully, our dividends can grow as forecasted."

Earlier this week, Rosan revealed that Danantara currently boasted $1 trillion in assets. Indonesia’s largest banks BNI, BRI, and Mandiri are under Danantara’s wings. The same goes for PLN, which has a monopoly on the electricity sector. The fund has Pertamina, the oil giant that has been under the spotlight in recent months after private gas stations ran out of supplies. However, Danantara’s annual dividends, which stands at $7 billion, only come from 10 companies -- an tiny fraction compared to the number of SOEs it manages.

“If I look at the trajectory for the next five years, our dividend is between $7 billion and $10 billion. So I can invest up to $40 billion for the next five years. That’s without leverage. That’s all equity money,” Rosan said Tuesday.

A fivefold leverage can grow Danantara’s investment capacity to $250 billion, according to Rosan’s estimates.

Danantara intends to cut down the number of Indonesian SOEs from the current 1,000 -- which include sub-subsidiaries -- to 200s. President Prabowo Subianto, too, wants to see a more rational figure on the number of SOEs operating in the country. There are some mergers in the pipeline. Danantara is exploring the possibility of merging the flag carrier Garuda Indonesia and Pertamina’s aviation subsidiary Pelita Air. Another recent major move is letting foreigners assume leadership roles in Indonesia's state firms. Most recently, two foreign nationals had become directors at Garuda Indonesia, which had been in the red for some time.

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