BPI Danantara (sovereign wealth fund) was announced by Indonesia’s President Prabowo Subianto here on Monday (Feb. 24) with an intention to increase the efficiency and effectiveness of BUMN assets to be more optimal.

Jakarta (Indonesia Window) – President Prabowo Subianto here on Monday (Feb. 24) announced the establishment of the Indonesian Daya Anagata Nusantara Investment Management Agency (BPI Danantara / sovereign wealth fund) as a holding company of the State-owned Enterprises (locally known as its abbreviation of BUMN).

The decision is intended to increase the efficiency and effectiveness of BUMN assets to be more optimal.

The legal umbrella for the establishment of BPI Danantara is based on Law Number 21 of 2025 as an amendment to Law Number 19 of 2003 concerning State-Owned Enterprises (BUMN).

However, in the midst of the Prabowo-Gibran Government, presenting Danantara also raised questions about the risks and impacts.

Many doubt its success, especially since the initiator is a former corruption convict who has been sentenced to five years in prison.

Public suspicion grew stronger when BPI Danantara was protected by a legal umbrella that prevented them from being investigated by the Corruption Eradication Committee (locally known as its abbreviation of KPK), the National Police, and the Attorney General's Office if irregularities were suspected.

The only control is the Parliament (DPR RI), which does have a supervisory and control function.

The only problem is that the DPR RI legislative seats are controlled by the government's supporting party, the Advanced Indonesia Coalition (KIM) plus, so it is predictable that Danantara is not afraid of being "finished off" by Senayan (DPR RI) if there is a decision that is considered to deviate from the purpose of establishing the agency that will manage these state-owned companies.

Golkar Party politician, Prof. Dr. Henry Indraguna, explained that the purpose of establishing Danantara is actually as a BUMN holding that will manage and supervise BUMNs in Indonesia more optimally and provide a significant impact on driving economic growth of up to eight percent.

Thus, the government hopes to increase the efficiency and effectiveness of BUMNs, as well as increase transparency and accountability in the management of BUMN assets.

Prof. Henry agreed that the establishment of Danantara was a strategic step by the Prabowo Government to increase transparency and efficiency of state-owned companies.

"The point is that with this agency, the management of BUMN will be more transparent and efficient and importantly, it will have an impact on Indonesia becoming a developed country out of the middle income track trap," the Expert Advisor to the Research and Development Agency of the Golkar Party told reporters in Jakarta, Monday (Feb. 24).

Prof. Henry is optimistic that Danantara can be a good asset management instrument for the country and the people, as long as this agency is managed professionally and free from interference from any political interests.

"The key is that its management must be professional. There should be no imbalance between return on investment and recycle assets. This is one of the keys to Danantara Indonesia being able to succeed according to its goals," Prof. Henry pointed out.

Prof. Henry hopes that Danantara Indonesia can also be a means of recycling assets that have not been utilized to become productive assets and have high valuation values, meaning this sovereign wealth fund should be able to attract big investors to manage or develop these 'idle assets'.

For example, he said, assets that have not been utilized because they are in the hands of BUMN can be recycled so that they become productive assets that might attract investors.

"But what is important and must be proven by the Danantara Indonesia Supervisory and Management Agency is that President Prabowo Subianto's ideals of making this super holding company truly able to manage BUMN assets worth US$ 900 billion or above 14 thousand trillion rupiahs must have an impact and be in accordance with its good purpose of accelerating the welfare and prosperity of the people," said the Doctor of Law from a state university in Surakarta, Central Java,  and Borobudur University Jakarta.

People's expectations are very reasonable, continued Prof. Henry considering that with such large assets, Danantara has entered the top 10 sovereign wealth funds (SWF) with jumbo capital in the world. With this capital, Danantara is expected to be a game changer for the national economy.

"The hope is that it can increase the efficiency and effectiveness of BUMNs by reducing overhead costs and increasing synergy among BUMNs. Second, it can increase the transparency and accountability of BUMN, by implementing good governance standards and clean government," Prof. Henry underscored.

The bad side to watch out for

The professor from Unissula (Universitas Islam Sultan Agung/Sultan Agung Islam University) in Indonesia’s city Semarang, Central Java province, reminded us of the bad side that must be watched out for and if not managed properly, Danantara can create a risk of conflict of interest between the government and BUMNs.

"BUMNs’ flexibility in making business decisions is also limited. Not to mention the fact that the formation of a new institution certainly requires high costs, both in the form of operational costs and transaction costs. So the calculation must be very mature," he said.

According to him, the formation of Danantara is a strategic step to increase transparency and efficiency of state-owned companies. With this agency, the management of BUMNs will be more transparent and efficient.

"Assets that have not been utilized because they are in the hands of BUMNs can be recycled so that they become productive assets that may attract investors but what is important is that the management must be professional," he said.

Reporting by Indonesia Window