The Indonesian government recently formed a new super-holding legal entity designed to manage SOEs’ operation, State-owned assets and dividend (deriving from SOEs) called Daya Anagata Nusantara or more commonly known as “Danantara”. Danantara’s capital derives from, among others, state-owned assets and shares owned by State in SOEs and its formation is based on Law No. 1 of 2025 on State-Owned Enterprises (“SOE”) that amended Law No. 19 of 2003 of the same title (“Law 1 of 2025”).
This newsletter discussed key highlights of meaning of Danantara for investors.
- Investment Opportunities
One of key roles of Danantara is to oversee and manage SOEs and their dividends, including to approve capital increase of SOEs as well as to (together with the Minister of SOE), approve proposed assets write-offs of SOEs, which authority was previously of the Minister of SOE (or, in certain cases, the SOE’s BOC).Structure of Danantara according to Law 1 of 2025 can be described as follows:
In managing the assets and the investment, Danantara collaborates with its Investment Holding, Operational Holding, or any other third parties.
In March 2025, several SOEs including PT Telkom Indonesia (Persero), PT Bank Mandiri (Persero), Tbk and PT Garuda Indonesia (Persero), Tbk notified Indonesia Stock Exchange (IDX) that all shares owned by the Republic of Indonesia in those SOEs were transferred to the Operational Holding.
Danantara is authorized by law to invest dividends deriving from SOEs in several sectors, including for example: food security or “ketahanan pangan”, energy, downstream, and digital infrastructure[1] and to achieve this, Danantara may collaborate with third parties, which interpreted to include private sectors.
It remains to be seen how exactly Danantara will operate, how Danantara’s investment will be structured, or how Danantara’s asset can be managed, as Law 1 of 2025 mandates enactment of government regulations to further regulate the details.
As Danantara reports directly to the President, investors may need to anticipate heightened political oversight and potential swift policy shifts driven by national priorities, including those related to foreign investments opportunities (including negative list).
- Business Judgement Rule
One clarification made by Law 1 of 2025 is to differentiate “business judgement rule” from ill intent, and that losses suffered by Danantara due to business decisions are not classified as state losses. This clarification, if interpreted and implemented consistently, is an improvement because it provides greater legal certainty for Danantara’s management and potential investors, shielding them from undue liability when acting in good faith and making commercially reasonable decisions and will help give space to Danantara to focus on making commercial calls, and in the long run this hopefully can also offer some level of certainty to investors and the public. - What about INA?
The formation of Danantara does not eliminate existence of Indonesia Investment Authority or commonly known as INA. Although, to some, the roles of Danantara and INA may appear similar which is as Indonesia’s ‘sovereign wealth funds’, the key difference is that Danantara focuses on management of and investment in SOEs, while INA focuses on general investment.
In line with the above, the SOE Minister and CEO of Danantara confirmed that INA will remain in operation as one of Indonesia’s sovereign wealth funds[2]. This means, investors that are currently partnering or working together with INA should not have any concern on this regard.
[1] https://www.cnbcindonesia.com/market/20250324154905-17-621277/ini-dia-proyek-proyek-yang-bakal-didanai-danantara-pertama-kali
[2] https://www.cnbcindonesia.com/market/20250226170325-17-613911/soal-nasib-ina-usai-peresmian-danantara-ini-kata-erick-thohir
https://jakartaglobe.id/business/ceo-rosan-roeslani-denies-rumors-of-ina-being-under-danantara