February 26, 2025
JAKARTA – Indonesia’s newly launched sovereign wealth fund, Danantara, will not prioritize funding for Nusantara, the future capital city located in East Kalimantan, presidential spokesman Hasan Nasbi said on Monday, stressing the fund would focus its investment on downstream industrial development.
“Danantara is an instrument for accelerating development, mainly in downstream sectors, to boost development and to drive key industries forward,” Hasan told reporters at the State Palace in Jakarta.
President Prabowo Subianto launched Danantara on Monday, tasking it with managing over US$900 billion in assets to help drive development in Southeast Asia’s largest economy and fulfill his ambitious promise of boosting economic growth to 8 percent.
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The fund will invest its initial capital of $20 billion across dozens of multibillion-dollar megaprojects, from downstream nickel, bauxite and copper industries, artificial intelligence data centers, oil refineries, petrochemicals, food production, aquaculture and renewable energy.
“It is an accelerator [for the country’s development] so it will heavily focus on downstream sectors,” Hasan emphasized, suggesting that projects outside this scope were unlikely to receive funding.
Danantara will be the country’s second sovereign wealth fund, after the Indonesia Investment Authority (INA), which was launched in 2021 and holds $10.5 billion in assets.
The fund will have two units: A holding company overseeing state-owned enterprises and an investment arm, Danantara CEO Rosan Roeslani said on Monday.
Rosan, who also serves as investment and downstream minister, said the fund would attract foreign investors by offering them the opportunity to invest in national projects with Danantara as a co-investor to “have skin in the game”.
The Nusantara Capital City (IKN) Authority was hoping for a slice of Danantara’s capital to support the megaproject’s development, its head Basuki Hadimuljono said on Monday.
“If I’m not mistaken, Danantara is meant to invest using dividends from state-owned enterprises. I’d love for [Nusantara] to get a small cut,” Basuki said. “Hopefully, we get a share of the program.”
He added that the authority body had not yet submitted a formal request, but he hoped that Danantara would allocate some resources to Nusantara, noting that the fund was “not just an investment vehicle, but also a national development tool”.
Read also: IKN’s budget bumped to Rp 14t despite broader cuts
The IKN Authority was among those affected by widespread spending cuts ordered by Prabowo this January. Its budget was trimmed from Rp 6.3 trillion (US$385.72 million) to Rp 5.15 trillion.
Despite government-wide spending cuts affecting ministries and agencies, the future capital city’s budget was bumped to Rp 14 trillion this year, following a top-up request, which was endorsed by Prabowo in January and formally submitted to the Finance Ministry and State Secretariat.
The budget was to be used for phase two of construction, Basuki said, focusing on the legislative and judicial complexes and supporting infrastructure, as well as to fund building maintenance.
Prabowo has on multiple occasions publicly backed the continued construction of Nusantara but has shown little urgency in accelerating its completion since taking office late last year, as he has several big-budget priority projects of his own.
During his presidential campaign leading to February’s election, Prabowo was confident that he could fund both Nusantara and his priority programs altogether.