Indonesia’s New Danantara Investment Fund Readies for Launch

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(Bloomberg)-A comprehensive reform process will lead to how Indonesia manages its powerful government companies to a millions of dollars in investment that can give President Prabo Subanto a large temporary storage memory for money to publish in his efforts to achieve superior growth.

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Brabu will be released, the new body, Danantara, at 10 am local time on Monday. It will be an investment vehicle and a holding company for state -owned institutions that dominate economics spaces from banks to energy. The newly revised law shows that it will present a report to the president, which allows him to control more entities and billions of dollars in annual profits.

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However, this step raises concern about governance and how the new structure will improve the current systems in a long nation besieged by the red tape and corruption. Also, while the government is subject to legal restrictions on financial deficit and debt, Danantara can provide a way to help finance projects outside these limits.

“Danantara, with her full control of state -owned companies, will be submitted directly to the president,” said Brian Tan, a Barclays economist. The main question is whether it will allow the government to directly influence the Soe capital, “and whether this leads to a more active spending on balance.”

Brabu is trying to restore Indonesia to economic growth by 8 % unprecedented since the mid -1990s during the era of authoritarian ruler Soharto, with the expansion of social programs that granted him high reviews. Work against it is to report consumption in the fourth most populated nation in the world and foreign investment is relatively small. His plan to re -allocate billions of dollars from the state budget to finance his signing programs last week led to his first major protests.

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Details of how Danantara would have been slim, with hints in recent weeks of parliamentary talks and legislative drafts and the president's comments passing through the events. Its website offers a notice “under construction”.

The 73-year-old said that he will receive 20 billion dollars in the initial investment funds for spending in 15-20 projects this year, indicating that the amount can be collected from a combination of cuts in the budget and what could be unprecedented levels of paid profits By government companies. The entity aims to finance projects in renewable energy and the production of food and industries, among other things.

Publico Danantara described it as more than $ 900 billion in management assets. Government data indicates that more than 60 government companies in Indonesia raised assets equivalent to about 638 billion dollars in 2023. It achieved about $ 20 billion in that year and paid about $ 5 billion from profits to the government.

“The state -owned companies are not currently graceful.” “Many assets are inactive, bureaucracy is long, and these factors prevent state -owned companies from moving quickly.” He said Danitara is the fastest way to enhance the economy and financial investments.

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The Law of the Reformers -Reformers Companies provides for the following:

• Danantara will have the authority to issue bonds and safe loans.
• Danantara will not be subject to audits by the Supreme Audit Agency in Indonesia (BPK) unless parliament declares. Auditing operations will be performed instead by public accountants.
• Danantara is protected from legal responsibility for losses unless negligence or conflict of interests or illegal personal gains.
• The Ministry of State -owned companies will retain the control of the veto in the decisions of the SOE board employees.
• The Minister of Companies, who are owned together, will take a role in overseeing Danitara.

The planners have likened the entity's ambitions to Temasek Holdings PTE, a state -owned investor in Singapore, and Norwees Bank Bank Bank, the world's largest sovereign wealth fund with more than $ 1.7 trillion.

Analysts will monitor the launch of its financing details and confirmation on its legal basis as well as who will lead the entity. Local media reports have proposed a number of influential local businessmen and Brabu's allies as potential candidates, including the Minister of Investment, Rossan Berkasa Rouzlani and Bando Sajhar, a technical investor and a prominent coalition executive director.

The international analyst for CGS Hadi Soegiarto wrote in a research note: “He also added, that is, an indication that the Minister of Labor of Indonesia Eric Thuir, a familiar and favorite name among investors,” maintains some authority in the new body.

“This is the president's gamble,” said Darmadi, the legislator. “If you manage properly without political intervention, we may achieve 8 % growth. But if not, it will become a monster.”

– With the help of Barima and Wriani.

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