President Prabowo Subianto has remained consistent in his vision of propelling Indonesia’s economy toward an ambitious 8% growth rate by 2029. Many people have criticized Prabowo's ambitious vision of achieving 8% economic growth, arguing that it seems unrealistic given the current state of the Indonesian economy. People's purchasing power has been declining, and concerns about government budget efficiency have grown, especially after reports of salary cuts and large-scale layoffs. The 'Makan Bergizi Gratis' (Free Nutritious Meals) program, a flagship initiative aimed at combating child stunting and improving health, has been cited by some as contributing to these budgetary pressures.

However, in February 2025, Prabowo unveiled 'Danantara,' a sovereign wealth fund designed to consolidate state assets, attract foreign investment, and drive economic growth. Prabowo stated that in the first 100 days of his administration, his government secured Rp300 trillion (almost USD 20 billion) in state savings. These savings, achieved through budget efficiency measures, were not solely intended to cover programs like 'Makan Bergizi Gratis' but were also earmarked as initial capital for Danantara.

Danantara is the most ambitious project and has a very grand appearance with the potential to become one of the largest sovereign wealth funds (SWFs) globally. With projected assets under management reaching Rp 14,665 trillion (approximately US$900 billion), it has the potential to rank among the top 10 largest SWFs in the world. Some sources even project that Danantara could manage $982 billion by 2029, or more than $1.2 trillion. This would place it in direct competition with established sovereign funds like Singapore's Temasek Holdings (with a portfolio of US$288 billion) and others managed by countries such as Saudi Arabia and Abu Dhabi.

It turns out the concept of Danantara was first envisioned over 40 years ago by Prof. Dr. Soemitro Djojohadikusumo, the father of President Prabowo Subianto. As a professor of economics and former minister, Soemitro strongly believed that a sovereign wealth fund could drive national economic growth and reduce inequality. Despite his advocacy during the 1980s and 1990s, successive governments did not act on the idea. Decades later, his vision was realized by his son with the launch of Danantara in February 2025. Hashim Djojohadikusumo, Prabowo's younger brother and Special Presidential Envoy for Climate and Energy, described this as an emotional milestone for their family, recalling their father's long-standing commitment to creating a state-backed investment management body. Danantara may hold the key to President Prabowo Subianto's confidence in achieving 8% economic growth during his presidency.

In 2021, during President Joko Widodo's administration, Indonesia established the Indonesia Investment Authority (INA) as its first sovereign wealth fund. With an initial capital of $10.5 billion, INA focused on attracting foreign investment into infrastructure, banking, and state-owned enterprises (SOEs). While INA achieved some success, including a 64.1% increase in net profit by 2023 (Rp 4.30 trillion), its relatively small capital base limited its ability to drive large-scale economic transformation or restructure SOEs effectively.

In contrast, Danantara, launched in February 2025 under President Prabowo Subianto, has a much broader mandate. With an initial capital of $61 billion and plans to manage up to $900 billion by 2029, Danantara was created to consolidate and directly oversee SOEs, restructure them through mergers or spin-offs, and invest in high-impact projects such as renewable energy and industrial downstreaming. Unlike INA, which focuses on co-investments and asset management, Danantara combines sovereign wealth fund functions with direct control over state assets.The government intends to merge the INA into Danantara to centralize investment management under a single, broader entity. Danantara will oversee investments from seven major state-owned enterprises (BUMN), including PT Pertamina (Persero).

However, skepticism surrounds its potential success, fueled by past failures like the Jiwasraya and Asabri scandals. Public concerns intensified when, a day after Danantara's inauguration, Riva Siahaan, acting president director of PT Pertamina Patra Niaga, was arrested for a corruption scheme involving crude oil adulteration from 2018 to 2023. The Attorney General’s Office estimated state losses at Rp193.7 trillion ($12 billion), while legal expert Hardjuno Wiwoho suggested total losses from Pertamina’s operations could approach Rp1 quadrillion. Critics fear Danantara could face similar issues of mismanagement and corruption, jeopardizing its ambitious goals.

There are notable similarities between Danantara and the infamous Jiwasraya and Asabri cases that have fueled public concerns. These include the involvement of state-owned enterprises (SOEs), a history of financial scandals, ambitious large-scale operations, and the potential for governance issues. Danantara’s ambitious goal of consolidating SOE funds into high-impact projects has raised questions about accountability and oversight, given Indonesia's past struggles with transparency in managing state-owned assets. Danantara is seen as 'too big to fail,' but its success will depend on avoiding the pitfalls of past SOE mismanagement and ensuring transparency in its operations.

There were initial rumors that Danantara would not be subject to audits by the KPK (Corruption Eradication Commission) and BPK (Supreme Audit Agency), raising concerns about weakened oversight. Indonesia Corruption Watch (ICW) expressed fears that Danantara’s establishment could reduce transparency in managing state-owned enterprises (BUMNs) and increase the risk of corruption. Wana Alamsyah from ICW stated that the BPK and KPK were not granted sufficient authority to audit or enforce laws regarding Danantara, which could heighten corruption risks within its associated BUMNs.

This skepticism is fueled by a broader distrust of government promises, as past assurances have often gone unfulfilled or contradicted by actions. Critics argue that Danantara’s large-scale operations, combined with Indonesia’s track record of weak governance in similar institutions, could make it vulnerable to abuse.

The supervisory ranks of Danantara include several prominent figures, both domestic and international. Former UK Prime Minister Tony Blair has been confirmed as a member of the Supervisory Board, alongside Indonesia’s Minister of State-Owned Enterprises (SOEs), Erick Thohir, who serves as Chairman, and Muliaman Hadad as Vice Chairman. The Supervisory Board also includes Sri Mulyani Indrawati (Minister of Finance). Former Presidents Susilo Bambang Yudhoyono (SBY) and Joko Widodo (Jokowi) serve as advisors to Danantara.

Additionally, with reassurance from CEO Rosan Roeslani, Danantara is supervised by multiple key institutions in Indonesia. These include the heads of the Corruption Eradication Commission (KPK), the Audit Board of Indonesia (BPK), the Financial and Development Supervisory Agency (BPKP), the Financial Transaction Reports and Analysis Center (PPATK), the Chief of Police (Kapolri), and the Attorney General's Office (Kejaksaan Agung).

Within its executive leadership, Pandu Patria Sjahrir serves as Chief Investment Officer (CIO). Pandu is notable for being the owner of PT TBS Energi Utama Tbk, a coal company, and also the nephew of former senior minister Luhut Binsar Pandjaitan. This connection has raised concerns about potential nepotism and conflicts of interest, particularly given Danantara’s role in managing state-owned enterprise assets and investments.

If Danantara was established to attract Foreign Direct Investment (FDI) to Indonesia, its success faces significant challenges given the current unfavorable FDI climate. In early 2025, the eFishery scandal shocked the nation, revealing years of financial misconduct that deceived prominent investors such as SoftBank Group Corp., G42, Northstar Group, and Temasek Holdings Pte., Singapore's sovereign wealth fund. The ongoing investigation uncovered that eFishery had inflated its revenue by nearly $600 million in the first nine months of 2024 and accumulated retained losses of approximately $152 million as of November 2024.

This scandal has likely undermined investor confidence in Indonesia, eroding trust in its startup ecosystem and damaging its appeal as a destination for technology investments. Beyond the financial losses, the incident highlights systemic issues such as weak regulatory oversight, governance failures, and insufficient due evaluation by even reputable investors like Temasek and SoftBank. These factors amplify concerns about Indonesia's broader integrity crisis in both its government and corporate sectors.

The eFishery case is emblematic of deeper issues within Indonesia's investment landscape, where governance lapses and transparency challenges continue to deter FDI. It serves as a stark reminder that without safeguards, even high-profile initiatives like Danantara may struggle to inspire confidence among international investors.

Danantara is often compared to Malaysia's 1MDB as a cautionary tale of potential failure in Indonesia, but it also opens the door to learning from the success of Singapore's Temasek Holdings. By examining Temasek's achievements, Danantara can adopt best practices in governance, transparency, and investment strategy to avoid the pitfalls that plagued 1MDB and instead build a sustainable and trustworthy investment institution.

Temasek was established in 1974 to manage investments independently from the Singapore government, ensuring a clear separation between policymaking and investment management. This autonomy has significantly reduced political interference. Since 2004, Temasek has consistently maintained 'Aaa/AAA' credit ratings from Moody’s and Standard & Poor’s and achieved perfect scores on the Linaburg-Maduell Transparency Index, thanks to its detailed annual reports outlining portfolio performance, investment strategies, and financial health.

Over the years, Temasek has delivered a compounded annual Total Shareholder Return (TSR) of 14% since inception, with 10-year and 20-year TSRs at 6% and 7%, respectively. By 2024, its portfolio value had grown to US$288 billion, positioning it as one of the most successful state-owned investment entities globally. This success underscores the importance of robust governance, transparency, and a long-term investment focus in building trust and ensuring sustainable growth.

In stark contrast to Temasek's success, the 1Malaysia Development Berhad (1MDB) scandal serves as a cautionary example of how poor governance and corruption can lead to disastrous outcomes in managing public funds. Unlike Temasek, 1MDB lacked independence and was heavily influenced by political leaders, particularly former Malaysian Prime Minister Najib Razak. This political control turned 1MDB into a tool for patronage rather than sound investment management.

The fund operated with minimal oversight and accountability, allowing key financial decisions to be made without proper checks and balances. This lack of governance enabled the embezzlement of over $4.5 billion through fraudulent transactions involving shell companies and offshore accounts. These misappropriated funds were used for personal luxuries, including yachts, luxury properties, and even financing Hollywood films like The Wolf of Wall Street.

The scandal implicated financial institutions globally and triggered criminal investigations in multiple countries. It also severely damaged Malaysia’s reputation as an investment destination, highlighting the catastrophic consequences of weak governance and unchecked corruption

To safeguard its investment reputation and avoid repeating past failures, Indonesia must prioritize robust governance and transparency for Danantara. With public trust in government waning, ensuring independent management and a clear separation from political interests is paramount. While Danantara faces significant challenges, its success is crucial for Indonesia to capitalize on its demographic dividend. The alternative—allowing state finances to be influenced by government interests—risks turning Danantara into another 1MDB, undermining its potential and jeopardizing Indonesia's economic future. The choice is clear: emulate Singapore's success or repeat Malaysia's mistakes.