A $4bn co-investment fund between Qatar Investment Authority (QIA) and Danantara is the first publicly-announced foreign investment in Indonesia via its new sovereign wealth fund (SWF). It’s a vote of confidence in the two-month old Danantara, but the deal has also sparked questions over its investment remit.
On April 15, Danantara announced that it and QIA will co-manage and each contribute $2bn to a joint investment fund dedicated to developing projects in Indonesia across priority areas including food security, downstream processing and tourism.
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President Prabowo Subianto and Qatari officials struck the deal during the Indonesian leader’s visit to Doha this week. A multi-billion dollar investment by QIA, among the world’s highest-profile SWFs, comes as Danantara tries to shake off early concerns about governance and political risks.
“This joint investment is a good development and hopefully sends a positive signal on Danantara’s seriousness,” says Brasukra Gumilang Sudjana, Indonesia country manager at advisory firm Vriens & Partners.
In a note, Daniel Brett, head of research at Global SWF, described the $4bn fund as a “major vote of confidence — at least on paper” in Danantara’s ability to spur economic growth.
Since Danantara launched in February with the goal of accumulating $900bn in assets under management (AUM), Indonesia’s government has claimed that UAE investors intend to invest in a $10bn renewable energy project alongside the SWF. But the deal with QIA — the world’s eighth biggest SWF, with AUM of $525bn, according to Global SWF — is Danantara’s first big win.
“This partnership is a concrete step in building trust with strategic global partners such as Qatar,” said Danantara CEO Rosan Roeslani, who is also investment and downstreaming minister, in a statement. “It shows that Indonesia … possesses the institutional capacity to manage investments professionally and accountably.”
The announcement follows criticism over Danantara’s lack of independent oversight, given that it reports to President Prabowo, who has also selected its supervisory board and executive body. Shares in three state-owned banks have plunged since it was announced they would be placed under Danantara’s control.
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The SWF has tried to allay governance concerns by appointing international figures such as billionaire investor Ray Dalio and economist Jeffrey Sachs as advisers last month.
FDI turf wars
Danantara will become a super-holding company for the country’s 47 state-owned enterprises (SOEs), akin to Singapore’s Temasek. However, the government also envisages the SWF as a vehicle to attract FDI. Danantara is running investor roadshows with SWFs and family offices in “many countries”, says Primadi Soerjosoemanto, principal of local advisory firm BI International.
There has been speculation over how foreign capital will interact with Danantara. FDI advisers have suggested public-private partnerships, joint ventures, debt financing of SOEs’ local projects, or co-investments as possible structures.
Mr Sudjana says Danantara’s capital is intended for “project funding rather than as a derisking facility”. But in practice, he says it could act as a catalyser SWF by investing alongside foreign investors. Nadhila Ismiralda, an associate at Dezan Shira & Associates in Jakarta, says the QIA deal suggests Danantara is “positioning itself as a co-investor … to de-risk entry for institutional investors.”
However, the country already has a catalyser SWF: the Indonesia Investment Authority (INA), which has $10.5bn AUM, was launched in 2021 and has co-invested in local infrastructure alongside Canada’s CDPQ and Abu Dhabi Investment Authority.
“The Qatari investment is a symbolic win … but it also brings to light strategic tensions,” wrote Mr Brett. By “veering into FDI catalyst territory … [Danantara is] doing the INA’s job”.
Data from fDi Markets shows Qatari companies have announced just eight other greenfield FDI projects in Indonesia since 2007.
Alex Irwin-Hunt contributed to reporting for this article