(Feb 3): Indonesia is poised to shift at least US$61 billion (RM272.91 billion) of state assets into a powerful new investment fund that reports directly to President Prabowo Subianto.

The new entity, Daya Anagata Nusantara, or Danantara, will oversee dividends from state-owned enterprises, and have broad control over capital injections and restructuring, according to draft legislation seen by Bloomberg. It will fall under the authority of the president, and assume some power from the State-Owned Enterprises Ministry, the draft showed.

The fund is central to Prabowo’s economic agenda, which aims to boost growth by luring investment and manufacturing while boosting consumers, including through a free school lunch programme.

Lawmakers are set to pass the amendments in a plenary session on Tuesday, Deputy Speaker Sufmi Dasco Ahmad said in a text message. Bills typically get passed once they reach the plenary session, and Prabowo enjoys supermajority support in Parliament. 

If the president doesn’t sign the bill within 30 days, it will automatically take effect.

The law helps to formalise Danantara’s authority over state assets, allowing it to approve capital increases, restructure companies through mergers, acquisitions, and spin-offs, and create new investment holdings after consulting with Parliament. 

The initial 1,000 trillion rupiah is based on the consolidated capital of state-owned enterprises in 2023, which was as much as 1,135 trillion rupiah, according to the draft.

The fund will start with cash, state-owned assets, and government-held shares, the draft showed. It will have the flexibility to make direct and indirect investments, and collaborate with state-owned enterprises and third-party investors. Danantara’s profits will be partially returned to the state, but only after it sets aside reserves to cover investment risks and capital accumulation. 

Further provisions on risk management will be set through separate regulations, it said.

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