Indonesia’s Danantara eyes up to US$10 billion in dividends in next five years amid SOE overhaul

[JAKARTA] Indonesia’s sovereign wealth fund Danantara expects to collect up to US$10 billion in dividends over the next five years as the government pushes ahead with a major overhaul of state-owned enterprises (SOEs), its chief executive officer Rosan Roeslani said on Tuesday (Oct 14).

“In five years, I see Danantara being much bigger, stronger and faster,” Roeslani said in a panel session at Forbes CEO Global Conference in Jakarta. “We aim to reduce the number of SOEs from around 1,000 to just over 200. Our focus is not only on Danantara itself but also on creating broader social and economic impact while generating strong returns.”

Roeslani said improving SOE performance could lift dividends to between US$7 billion and US$10 billion in the next five years, providing the fund with additional capital to invest domestically and abroad.

The fund currently manages assets totalling US$1 trillion from dozens of state-owned firms. This year, it expects to receive dividends of around US$7 billion.

Over five years, Roeslani said, equity investments could reach US$40 billion; and with leverage of four to five times, total investment capacity could rise to US$200-250 billion.

The fund is also expanding its reach through international partnerships, having already established joint funds with the Qatar Investment Authority, China Investment Corporation and Saudi Arabia’s Public Investment Fund to bolster its investment capacity.

Indonesian President Prabowo Subianto has made overhauling SOEs a cornerstone of his governance reform agenda, aiming to streamline operations, increase efficiency and unlock higher returns from entities that employ millions of people and dominate the country’s key economic sectors.

One of the government’s most significant moves has been to dissolve the Ministry of SOEs, granting Danantara the authority to manage assets and consolidate financially struggling SOEs.

Danantara recently cut the number of commissioners on SOE boards. Many previously had an average of 15 members, which was widely criticised for slowing down decision-making.

Roeslani said he has streamlined boards to five to seven members, and removed outdated practices such as the so-called “10th year bonus” for commissioners.

“All SOEs need to operate as corporations with strong governance, transparency and accountability,” he added. “These reforms were aggressive but necessary to improve performance, and ensure that state assets deliver value to the people.”