Revealed! The Reason Prabowo Formed Danantara Lies in the Downstreaming Project
Jakarta, CNBC Indonesia - Energy and Mineral Resources Minister Bahlil Lahadalia has revealed the reason behind President Prabowo Subianto’s decision to form the Danantara Investment Management Agency, particularly its impact on the national downstreaming programme.
Bahlil explained that Danantara was created to reduce the domestic industry’s dependence on foreign bank financing, which has long absorbed Indonesia’s economic profits.
“As soon as Pak Prabowo’s administration took the helm, that is the brilliance of Pak Prabowo. The President immediately created Danantara to finance all downstreaming in our nation so that all the value added stays in our nation. This is what makes it great,” he stated at the IPB Alumni Synergy for the Nation event on Saturday (2/4/2026).
The decision to establish the investment body also serves as a follow-up to evaluations showing that value added was flowing to other countries. He mentioned that although exports of processed products have increased, the benefits are often not maximised domestically due to capital controlled by international financial institutions.
“The issue with downstreaming is that we have received criticism from Pak JK (Jusuf Kalla) and the late Bang Faisal Basri. Pak JK said at the time that downstreaming is fine, but the value added goes abroad. Bang Faisal Basri also said the same,” Bahlil said.
According to him, the main cause of this outflow of value added is the lack of national banks capable of financing large-scale downstreaming projects. This condition forces industry players to seek loans from foreign banks, which ultimately require companies to repay the principal and interest abroad.
“After I checked, it is true that most of it benefits outsiders. Why? Because there are no national banks financing downstreaming credit. It’s all foreign banks. If it’s foreign banks providing it, we have to repay the principal and interest,” he explained.
Through Danantara’s funding, the government aims to transform Indonesia’s economic structure into a high-value-added industrial base. Bahlil assessed that downstreaming should not only process raw materials but also provide economic justice for local investors and communities in commodity-producing regions.
“Downstreaming must truly be able to provide benefits and justice for our nation. And there is a difference between countries that build downstreaming with industrialisation instruments and countries that only build industrialisation,” he concluded.