A New Chapter for Danantara
After nearly a year in operation, Danantara is entering a different phase. Public attention is no longer solely focused on the establishment of a new institution, but on how the governance architecture translates into investment decisions capable of strengthening national development.
Through a series of institutional reforms in 2025, the government established Danantara and BP BUMN as part of the overhaul of state-owned enterprise (SOE) governance. These reforms provide a clearer institutional foundation for managing SOEs and state investments. The next challenge is ensuring these opportunities genuinely translate into greater development impact.
Danantara’s institutional development points in this direction. Beyond asset management and investment functions, Danantara is now developing the Danantara Development Management Fund (DDMF) as an instrument to support the financing of strategic development projects.
The presence of these various instruments indicates that state investment governance is evolving and acquiring increasingly diverse functions. In this context, the more pressing question is no longer who manages the investments, but how each instrument is used appropriately according to its development objectives.
This functional difference also suggests that the measure of success for each instrument need not be identical. Instruments aimed at promoting strategic development cannot be assessed solely by their financial rate of return, just as commercial investments must still observe business discipline. Clarity of purpose is essential so that each instrument can be evaluated with appropriate performance indicators.
This shift in focus is important because the discourse on SOE investment has often been polarised. On one hand, SOE investment is seen as an engine of development that must be continuously strengthened. On the other, concerns arise that the dominance of SOE investment could reduce space for the private sector. In reality, the relationship between the two is far more dynamic than a simple choice between crowding in or crowding out.
Research on the relationship between SOE investment and private investment in Indonesia shows that this relationship differs across sectors. In the construction sector, for instance, SOE investment has a stronger correlation with increased private investment compared to other sectors.
This finding indicates that SOE investment can act as a catalyst, boosting investor confidence and opening space for private investment participation, particularly when placed in the right sectors and stages of development.
The finding offers one key lesson. The success of SOE investment cannot be adequately measured merely by the volume of investment realised or the rate of return generated. Equally important is the extent to which that investment can create new economic activity, generate a multiplier effect, and encourage private investment to flourish.
This also demonstrates that an investment strategy cannot be built on a uniform approach. Investment decisions must consider sector characteristics, stages of development, and the potential to create multiplier effects for broader economic activity.
In this context, Danantara’s institutional reform acquires a more substantive meaning. The establishment of a new institution provides a foundation for more professional investment governance, but the benefits of the reform will ultimately be determined by the quality of its implementation.
The division of roles among institutions must be accompanied by effective coordination mechanisms, clear division of authority, and a decision-making process capable of maintaining a balance between commercial and development objectives.
This principle is one of the main lessons in the analysis of SOE governance reform. Thus, institutional reform is not the end goal, but a prerequisite for investment decisions to be made more professionally, consistently, and with a long-term orientation.
This means SOE investment cannot be managed with a uniform approach. Each sector has different characteristics, risk levels, financing needs, and potential development impacts.
The presence of various instruments under Danantara actually opens opportunities to apply a more selective investment approach tailored to the characteristics of each sector. Consequently, every investment decision considers not only financial viability but also the potential to create new economic activity and attract private investment. Such an approach is increasingly relevant given Indonesia’s development challenges in the coming years.
Industrial downstreaming, energy transition, infrastructure development, food security, and the development of economic zones all require large-scale investment that cannot rely solely on the government or the private sector individually. Collaboration between the two is becoming increasingly vital, and SOE investment holds a strategic position as a catalyst to strengthen that collaboration.
Ultimately, the success of the reform is reflected not only in the institutions established, but in the ability of those institutions to produce decisions that create added value for the national economy. This success will be reflected in its ability to direct investment towards sectors capable of creating added value, strengthening national competitiveness, and promoting sustainable private investment participation.