Indonesia’s new $900bn sovereign fund hires US heavyweights

Jakarta — New sovereign fund Danantara Indonesia unveiled on Monday what it called a “dream team” to chart its strategy, including former presidents as well as advisory roles for hedge fund manager Ray Dalio, economist Jeffrey Sachs and former Thai premier Thaksin Shinawatra.

Danantara, launched last month, is Indonesian President Prabowo Subianto’s main vehicle to achieve his 8% economic growth target by 2029 by managing all shares of state-owned enterprises and reinvesting the dividends in commercial projects.

The fund is slated to eventually manage more than $900-billion worth of assets and has been described by officials as Indonesia’s version of Singapore’s Temasek.

Former Indonesian presidents Joko Widodo and Susilo Bambang Yudhoyono were named members of the fund’s steering committee, while Dalio, founder of the world’s largest hedge fund Bridgewater, will assume the advisory role alongside Thaksin, a billionaire who spent 15 years in self-exile avoiding jail for abuse of power and is the father of Thailand’s current premier Paetongtarn Shinawatra.

Reuters could not immediately contact Widodo and Yudhoyono for comment, while Bridgewater and Thaksin’s representatives did not immediately respond to requests for comment.

Media reports said former British prime minister Tony Blair is also set to become an adviser to Danantara. When asked whether Blair will join, Danantara CEO Rosan Roeslani would only say that the fund will announce more names later.

Sachs wrote in an email he had been appointed as Prabowo’s special adviser.

“And in this capacity (I) will serve on the advisory board of Danantara,” he said. “My work is entirely voluntary, to support Indonesia’s sustainable development, and is without any compensation.”

These advisers will offer guidance on managing the impact of global risks from intensified financial volatility and geopolitical factors, Danantara’s chief investment officer Pandu Sjahrir said at the appointment ceremony.

In its first wave of investment, worth $20bn, Danantara will target projects in natural resources processing, artificial intelligence development and energy and food security.

The establishment of Danantara and concerns about the state’s substantive role in the economy were among the causes of a market sell-off last week in Southeast Asia’s biggest economy, according to some analysts, when the main stock index fell as much as 7%, triggering a trading halt.

Stocks tumble

Indonesian stocks tumbled on Monday to their lowest since August 2021, while the rupiah currency hit a three-week low as concerns over the country’s fiscal health and growth prospects linger.

There have been concerns in financial markets over potential political interference in Danantara, though Prabowo has said the fund could be audited any time by anyone.

Rosan said the appointments of professional executives would further secure market confidence.

“When these names are received well, it could be a positive signal for the Indonesian economy, job creation,” he said at the same event, adding all of Indonesia’s state-owned enterprises were now under the new fund’s management.

Danantara’s team structure could potentially secure market trust as it is filled with global names who have credibility in the financial sector, Oktavianus Audi, an equity analyst at Kiwoom Sekuritas, said.

An economist at Paramadina University Wijayanto Samirin, however, said the fund's management must ensure that it could not be subject to political interference in future.

Danantara’s directors include former officials from banks such as Bank Mandiri and HSBC, a former director at Indonesia’s central bank, as well as the former chief investment officer of Indonesia Investment Authority, the country’s first sovereign wealth fund.

Reuters