Political Influence Dogs Indonesia’s Danantara
Questions over conflicts of interest, political entanglement and public opacity
When President Prabowo Subianto took the stage at the World Economic Forum in Davos, he presented Danantara, the state investment authority he created, as a transparent, professionally run bridge between global capital and Southeast Asia’s largest economy. Yet, nearly a year after its launch, the fund has become a lightning rod for criticism, dogged by questions over conflicts of interest, political entanglement and a striking lack of public transparency, raising doubts about whether the trillion-dollar institution is truly insulated from the very power it is meant to discipline.
Market participants are watching closely for signs that Danantara will make its long-anticipated debut in Indonesia’s equity market this month. Iman Rachman, the chief executive of the Indonesia Stock Exchange, said the bourse was still awaiting confirmation of its participation. “We are still waiting, because their target is January,” he told reporters on Wednesday. Officials have suggested that Danantara’s entry could help absorb selling pressure that has weighed on Indonesian equities since MSCI, the global index provider, froze its review of Indonesian stocks.
Rachman acknowledged that the Jakarta Composite Index has come under sustained pressure following a series of announcements by MSCI related to revisions to its free-float methodology. In its official statement, MSCI said the freeze was prompted by investor concerns over the transparency of shareholding structures. After tumbling more than 7 percent earlier in the week, the benchmark index fell by about 8 percent on Thursday, January 29, 2026, prompting a temporary trading halt. For many investors, MSCI’s decision is being read less as a technical adjustment than as a broader signal of global confidence — or the lack thereof — in Indonesia’s financial markets, reflecting demands for greater transparency in ownership structures and lingering concerns over the integrity of price formation in the equity market.
Pressure has also been evident in the foreign-exchange market. The rupiah has remained weak, moving against the trend of some regional currencies such as the Malaysian ringgit, which has been strengthening. The combination of a declining equity market and a fragile currency underscores investor caution toward Indonesia’s economic outlook and domestic risks, particularly when set against the more upbeat sentiment surrounding other emerging markets.
Prabowo, who occupies the highest supervisory role within the institution, formally the Daya Anagata Nusantara Investment Authority, described it as a credible and professional partner, operating under transparent, internationally recognized standards of governance. The narrative appears designed to rebrand Indonesia’s image from a country often seen as carrying high political risk into a rational and secure investment destination. Funds now under management are estimated to have reached as much as US$1 trillion, positioning the institution not only as an investment authority but also as a de facto super-holding company with scope and assets unprecedented in Indonesia’s history.
Formally inaugurated last February, the agency was conceived as a state vehicle to accelerate investment in strategic sectors including mineral downstreaming, energy and infrastructure. By July, it claimed to have secured funding commitments and credit facilities from foreign institutions totaling up to US$17 billion. It planned to disburse roughly US$10 billion in the final quarter of 2025 alone, including financing for a Hajj village project in Saudi Arabia, upstream projects of the state energy company Pertamina, and waste-to-energy facilities.
Beyond overseeing all 889 state-owned enterprises including subsidiaries and sub-subsidiaries, Danantara has been granted a mandate to invest in a wide range of National Strategic Projects, [PSN], including in energy and mineral processing sectors that have long been fraught with controversy. At least 77 PSN projects have been designated for implementation during Prabowo’s 2025-2029 term.
Risk of Conflicts of Interest
From its inception, Danantara’s governance structure has drawn criticism. Prabowo’s constitutional role as chairman of the supervisory board, combined with a management lineup populated by figures with close political and business ties to him, has raised red flags.
In international practice, sovereign wealth funds and state investment authorities are typically designed to maintain a clear distance from day-to-day political power, precisely to minimize interference, preserve investment discipline and shield public funds from short-term political considerations. When those boundaries blur, the risks of moral hazard and the politicization of investment decisions become increasingly tangible, critics say. Indonesia Corruption Watch has identified at least 24 of the 31 individuals in its organizational structure as Politically Exposed Persons—current or former holders of public office or individuals with significant power or influence—considered more vulnerable to involvement in illicit activities such as bribery, corruption or money laundering. At least seven of those 31 are said to maintain active political affiliations.
Civil society groups also have pointed out that a number of projects promoted, ranging from coal downstreaming and energy development to natural-resource-based ventures, involve individuals or companies with close political ties to the president or to Danantara’s leadership itself. One project frequently cited is the Kayan Hydropower Plant in North Kalimantan, billed as one of Southeast Asia’s largest energy projects and a cornerstone of Indonesia’s green industrial ecosystem and mineral downstreaming agenda. Behind the narrative of energy transition and sustainable development, multiple sources suggest that companies linked to Hashim Djojohadikusumo, Prabowo’s brother, may be involved, whether as developers, strategic partners, or suppliers.
Coal downstreaming is under scrutiny, particularly the development of gasification technology to produce dimethyl ether, or DME. Planned for three sites across Sumatra and Kalimantan, the project has long been promoted as a substitute for imported liquefied petroleum gas. Civil society studies, however, have highlighted that the mining areas and supporting zones for the project are located on land associated with companies that have historical ties to Prabowo.
Strategic advantages
Placing PSN projects under Danantara does offer strategic advantages. Acting as executor and investment coordinator, it can access funding more quickly, adopt more flexible financing structures and absorb risks that have traditionally deterred private investors. In short, it is positioned as a tool to reduce country risk, accelerate project realization, and ensure long-term funding sustainability.
Yet in the renewable energy sector, several prominent business figures active in the field also maintain close political connections to Prabowo or to Danantara’s leadership. Among them is Aburizal Bakrie, a central figure in the Bakrie Group and a member of the Prabowo–Gibran campaign advisory board. There is also Boy Thohir, the chief executive of Adaro Energy, who has publicly declared his political support and is related to Erick Thohir, Indonesia’s minister of state-owned enterprises and a member of Danantara’s supervisory board. To many analysts, this web of positions and relationships signals the potential for conflicts of interest in the management and financing of renewable energy projects designated as nationally strategic.
In Papua, particularly in the large-scale rice field and food estate project in Merauke, South Papua, attention has focused on the involvement of the businessman Andi Syamsuddin Arsyad, widely known as Haji Isam, who in August received the prestigious Bintang Mahaputera Utama award from the president, usually interpreted as a sign of a close relationship. Through his Jhonlin Group, Isam has been tasked with handling critical aspects from land clearing to the construction of supporting infrastructure and the mobilization of heavy equipment. From the outset, the project has faced criticism over its environmental impact and the lack of consultation with Indigenous communities, who fear that large-scale land clearing threatens their livelihoods and traditional rights.
Isam’s proximity to Prabowo has fueled concerns: a businessman with direct access to the head of state is entrusted with high-value strategic projects, blurring the line between decisions based on business capacity and those driven by political patronage. Those concerns are compounded by the lack of public transparency surrounding the selection of PSN project implementers and the absence of independent oversight of their social and environmental impacts.
Transparency and Accountability Deficit
From the beginning, critics have pointed to the limited transparency in institutional design, particularly the absence of adequate public disclosure regarding investment decision-making mechanisms, project selection criteria and conflict-of-interest mitigation. Civil society organizations including Yayasan Indonesia Cerah, Indonesia Corruption Watch, Trend Asia and Climate Rangers have launched an independent platform known as Danantara Monitor to track and report on the institution’s activities.
The consequences of this opacity are becoming increasingly apparent. A number of projects have sparked public controversy because they appeared abruptly, without clear explanations of how they were selected or why they were prioritized. In some cases, the names of companies and individuals involved became known only after projects were announced as part of the national strategic agenda, rather than during the planning stage. As a result, space for public and parliamentary oversight has narrowed, while perceptions of conflicts of interest have hardened in the absence of timely official clarification.
Perhaps most significantly, the situation has begun to erode confidence both domestically and internationally. Governance experts warn that without strong transparency safeguards, Danantara risks being perceived not merely as a state investment instrument but as an extension of political power and particular business networks. Even if such perceptions do not culminate in legal violations, they could undermine its credibility as a long-term investment partner, ironically contradicting the very purpose for which the institution was created: to serve as a professional, globally trustworthy steward of Indonesia’s state assets.