Published on August 12, 2025, by DealStreetAsia
by Gita Rossiana
edited by: Joymitra Rai
Indonesia’s sovereign wealth fund Danantara has hit the ground running since its launch in February 2025, investing in a number of local companies while facilitating other significant transactions. Although its financial support is widely seen as crucial for distressed businesses and major projects, analysts have raised concerns over transparency and potential political interference in its investment decisions.
Danantara’s first big move came on June 17, when it partnered with the Indonesia Investment Authority (INA) to back PT Chandra Asri Pacific Tbk’s $800-million chlor alkali-ethylene dichloride (CA–EDC) plant. The project aims to reduce Indonesia’s dependence on imported petrochemicals and supply critical inputs for downstream industries such as nickel processing — a key pillar in the country’s push for industrial self-sufficiency.
Weeks later, the fund took a more politically sensitive step, extending a 6.65-trillion-rupiah ($415 million) shareholder loan to flag carrier PT Garuda Indonesia (Persero) Tbk for fleet maintenance and operational upgrades. “Garuda is not only a business entity but also a symbol of national pride and air sovereignty,” said COO Dony Oskaria in June 2025, underscoring the loan’s tight shareholder oversight.
Despite this, Garuda’s financial situation remains fragile. The airline posted a $75.9-million net loss in Q1 2025, weighed down by an 18.3% rise in operating expenses and a sharp decline in other income, even as passenger numbers and revenue improved. With surging fuel costs, supply-chain disruptions, and rupiah volatility, industry insiders describe the bailout as “politically sensitive” but strategically necessary, given Indonesia’s vast archipelago where national connectivity is as much a policy priority as a commercial one.
By August, Danantara shifted focus towards clean energy, brokering a deal between PT Pertamina Geothermal Energy Tbk (PGEO) and PT PLN Indonesia Power (PLN IP) to unlock up to 1,130 MW of geothermal capacity — a package valued at up to $5.4 billion. Covering 19 operational sites with expansion potential, the collaboration highlights geothermal power’s crucial role in Indonesia’s twin goals of energy security and decarbonisation, according to CEO Rosan Roeslani.
Call for transparency
Despite Danantara’s headline-grabbing deals, experts warn that the fund must focus exclusively on profitable projects that adhere to clear, publicly disclosed criteria. “Transparency in investment selection is essential to enable public scrutiny over which companies deserve financial support,” Bhima Yudhistira, director of the Center of Economic and Law Studies (CELIOS), told DealStreetAsia.
Sustainability is central to Danantara’s mission, yet the fund’s early investments appear contradictory, with capital flowing into petrochemicals — a sector widely regarded as unsustainable due to its heavy dependence on fossil fuels, significant greenhouse gas emissions, and environmental damage caused by hazardous waste and plastic pollution.
The bailout of Garuda Indonesia further raises questions about whether Danantara is prioritising the rescue of distressed companies over supporting emerging economic sectors that can generate long-term value and employment.
Moreover, since Danantara’s funds come from dividends of state-owned enterprises (BUMN), which in turn draw from the state budget (APBN), the fund must carefully balance the interests of both the public and shareholders. It should also steer clear of politically sensitive investments, especially those involving conglomerates with potential conflicts of interest, according to Yudhistira.
“What market watchers are eagerly awaiting is the publication of Danantara’s official investment criteria on its website,” Yudhistira concluded.
Returns and future bets
Hendra Wardana, analyst and founder of investment platform Stocknow, sees Danantara’s early moves as part of a broader strategy to strengthen national strategic assets with high multiplier effects. He noted that these transactions position Danantara not just as a capital allocator but as a steward ensuring public funds are directed to sectors vital for Indonesia’s economic resilience.
“These investments align with the government’s wider agenda — from clean energy transition and upstream industrialisation to improved air connectivity — all enhancing competitiveness and self-reliance,” Wardana told DealStreetAsia.
His views echo those of Danantara managing director Arief Budiman, who in June 2025 outlined plans to deploy $5 billion over six to nine months across eight priority sectors, including minerals, renewable energy, healthcare, digital infrastructure, and food and agriculture.
Operating in a dual role as both investment holding entity and operational supervisor for around 50 state-owned enterprises across 12 sectors, Danantara expects to receive 120 trillion rupiah ($7.4 billion) in SOE dividends in 2025, earmarked for reinvestment in strategic initiatives.
Oktavianus Audi, vice president at Kiwoom Sekuritas Indonesia, highlighted that the fund’s initial investments reflect a strategy to deepen the domestic investment ecosystem and mobilise local capital via public markets.
Kiwoom estimates the Pertamina Geothermal-PLN partnership could yield an 11-13% internal rate of return (IRR), while Chandra Asri’s petrochemical plant may deliver 12-16%. The Garuda loan carries a projected 10-14% return, albeit with higher risk.
Looking ahead, Wardana identified future targets as companies deemed “too important to fail” within Indonesia’s economic framework. Potential sectors include new renewable energy, strategic infrastructure, petrochemicals, strategic metals, and mass transportation. He added that projects with high multiplier effects, readiness for immediate development, and alignment with long-term road maps, such as Net Zero Emission 2060 and industrial independence, would be prioritised.
“With this approach, Danantara can become a locomotive for not only moving state funds but also directing large capital flows to sustainably drive Indonesia’s economic transformation,” Wardana said.
Audi pointed to candidates fitting into Danantara’s profile — capital-intensive, systemically important, and offering significant restructuring or transformation potential — across several SOE-led sectors. These include troubled construction firms PT Wijaya Karya Tbk and PT Waskita Karya Tbk; state-owned pharmaceutical producer Bio Farma, aiming to expand medical manufacturing; and mining holding MIND ID, accelerating downstream processing of strategic minerals.