Questioning Danantara's Potential Profits and Losses

Along with the discussion of the Bill on changes to the BUMN Law, there is widespread news about the formation of Danantara.

Danantara is an institution that will function as an investment management body, which will later bear the significant responsibility of managing the capital and assets owned by the state.

Although the experience of other countries shows the potential success of institutions similar to Danantara, mitigation is needed against the threat of mismanagement that could deplete state funds.

Daya Anagata Nusantara (Danantara) became one of the main topics in the Level II Plenary Working Meeting of the House of Representatives regarding the revision of Law No.19 of 2003 on State-Owned Enterprises.

In the discussion, it was stated that Danantara is an institution that is predicted to become a catalyst for new growth in Indonesia.

In his speech at the "World Government Summits" event, President Prabowo Subianto stated that the assets to be managed by Danantara are substantial, amounting to approximately 900 billion US dollars. When converted, this value is equivalent to IDR 14,647.5 trillion.

What Danantara intends to do is actually not something new. Previously, several countries have taken similar steps by establishing institutions that manage investments from state funds. Generally, this institution is referred to as a Sovereign Wealth Fund (SWF).

One of the success stories of SWF can be seen from the journey of Temasek Holdings. Temasek Holdings is an investment company owned by the Singapore government that was established in 1974.

As a state-owned company, Temasek is supervised by the Singapore Ministry of Finance, but its management is carried out independently and professionally.

From the various investments made, the results have been fruitful. Temasek holds shares in several major companies such as DBS Bank, SingTel, and Alibaba. In 2023, the value of Temasek's portfolio reached approximately S$382 billion (around Rp4,500 trillion).

Another SWF that can also serve as a positive precedent is the China Investment Corporation (CIC). CIC is a sovereign wealth fund established by the Chinese government in 2007.

The Chinese government has given CIC a mandate to manage part of the country's foreign exchange with a focus on long-term investment returns.

Running for about a decade and a half, CIC has grown rapidly. In 2023, CIC managed assets of more than 1.35 trillion US dollars or equivalent to Rp20 thousand trillion.

CIC itself invests in various global sectors, including stocks, bonds, real estate, and infrastructure. Some of its well-known investments include stakes in companies such as Blackstone, Morgan Stanley, and the global energy sector.

Interestingly, the CIC currently functions not only as an institution responsible for the economic dimension, but also politics. This was expressed by Zongyuan Zoe Liu, a researcher and writer who focuses on China's political economy.

According to him, CIC has evolved into a sovereign leveraged fund. The difference is, this institution does not only aim to generate financial profits, but also to support China's national geopolitical and economic interests.

This can be seen from the large involvement of CIC in investing in projects initiated by the Chinese government, such as the Belt and Road Initiative (BRI).

However, it does not mean that SWF always reaps success. If managed poorly, this institution can actually become a fresh ground for stealing state money.

One of them can be seen from the corruption case in 1Malaysia Development Berhad (1MDB). Looking back, the scandal in this institution not only damaged Malaysia's reputation in the eyes of the international community, but also caused political and economic instability in the country.

In short, 1MDB is a SWF established by the Malaysian government in 2009. Its aim is to drive Malaysia's economic development through strategic investments in infrastructure, energy and property projects.

However, 1MDB became the locus of one of the biggest corruption scandals in Malaysian history, with losses estimated at $4.5 billion or around Rp. 70 trillion.

The 1MDB scandal came to light in 2015, when investigations by several countries, including the United States, Singapore and Switzerland, revealed that there were funds managed by 1MDB that were misused for the personal interests of a number of high-ranking Malaysian officials and their partners.

Not only that, former Malaysian PM, Najib Razak, was charged as the mastermind behind this embezzlement. Based on findings from the US Department of Justice (DOJ), Razak was proven to have received a flow of funds of 700 million US dollars through his personal account.

Razak spent the corrupt money on extravagance, including buying luxury properties and a collection of works of art.

The 1MDB scandal could be an alarm for the government to prepare mitigation measures to prevent potential misappropriation in Danantara's environment.

From this case, we can learn that SWF is vulnerable to misappropriation if not managed accountably. Not only that, the large interference from a number of political elites, instead of a professional corporate governance system, is also one of the main causes of the 1MDB scandal.

Therefore, the derivative regulations of the BUMN Bill that regulate Danantara must be able to emphasize the importance of transparency, independent audits and strict operational supervision.

Don't let the assets worth tens of thousands of trillions of rupiah managed by Danantara disappear and end up in the pockets of a handful of irresponsible elites in the future. (LITBANG KOMPAS)