Ray Dalio and Jeffrey Sachs picked to advise Indonesia’s sovereign wealth fund

Danantara, Indonesia’s new sovereign wealth fund, has engaged billionaire investor Ray Dalio and economist Jeffrey Sachs to serve as advisers. This is a controversial formula that Trump is exploring with Musk, making the billionaire a huge part of his advisory team.

In an emailed statement, Sachs said President Prabowo had asked him to be a special advisor to the government. He said, “I have accepted joining the advisory board of Danantara on that basis. I will serve entirely without any compensation whatsoever and not be involved in any transactions.”

There are more nominations. The fund also added Chapman Taylor, an equity portfolio manager at Capital Group, and Thaksin Shinawatra, the former prime minister of Thailand, to its advisory board. Joko Widodo and Susilo Bambang Yudhoyono, both former presidents of Indonesia, have also been added to the fund’s steering group.

This comes as investors worry about the fund’s management growth, as it will be in charge of state assets worth billions. 

Indonesia turns to Ray Dalio to ease SOE weight on Indonesian stock markets

President Prabowo Subianto started the Danantara fund in February. It merged all of the country’s state-owned businesses into one large organization. The government thinks that the fund will help the economy grow by putting money into important businesses and projects.

According to reports, more than $900 billion is thought to be held by Indonesia’s State-Owned Enterprises (SOEs) in banking, energy, and telecommunications. The seven biggest companies alone own $570 billion worth of assets, which is about 40% of the country’s total GDP.

All seven companies’ market value is more than $100 billion, and four of them are widely traded. Some other companies’ units are also traded on the Indonesian stock exchange.  

The biggest challenge has been Prabowo’s direct power over the fund. In addition, the fact that SOE dividends were moved from the state budget to the new fund has raised concerns about political interference, lack of openness, and poor management.

Charlie Linton, Asia Pacific Equity Portfolio Manager at Ninety One, said, “Investors are concerned over the consolidation of listed SOE holdings into a new sovereign wealth fund where little detail has been disclosed around the governance at this point.” 

Linton said that this made foreign investors even more wary of the new government’s policies, which he called “far more populist” than those of the Widodo administration.

These worries have hurt the Indonesian stock market, making people even more worried about a slowing economy and a worsening budget. The nomination was supposed to calm the markets. However, today’s choices didn’t calm the markets down; Jakarta’s main stock index fell as much as 4.7%.

That’s not all. Traders remained on edge as US President Donald Trump’s barrage of tariffs due next week threatened global trade and economic growth. According to analysts, the Indonesian market will stabilize over the next three months, so fundamental investors should take this opportunity to buy quality stocks on the cheap.

The state budget is under pressure 

Prabowo said at the launch in February that Danantara would invest $20 billion in the food, energy, mineral processing, and AI industries. The president said budget cuts would pay for Danantara.

Now, dividends from all SOEs will go to Danantara instead of the government’s yearly budget, which is not new. This is what they usually did. They gave out a total of $5.4 billion in profits last year.

That change will leave a hole in the budget, which is already short this year because of less money coming in. This makes people even more worried about how the government will pay for its big policies and development projects.

Prabowo’s signature policy, which costs $28 billion a year, is to give free lunches to kids and pregnant women. This puts pressure on the state budget.

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