Indonesia's sovereign wealth fund Danantara has pledged to invest $5 billion in Indonesian businesses over the next six to nine months. The commitment was made before MSCI proposed downgrading the country to standalone status — a move that has since sent the Jakarta Composite Index down 11.6%.
Pandu Sjahrir, Danantara's chief investment officer, said the fund is focused on the basics of Indonesian companies because they are growing in a healthy way. He spoke to Fortune on the sidelines of the DBS Asia Future Forward Conference in Singapore on Oct. 12.
Why Danantara Is Buying Indonesian Stocks
Sjahrir made it clear that the fund sees the current market conditions as a buying opportunity rather than a reason to pull back. He said the fund's job is to look at, support, and buy great companies.
"We're encouraging our guys to focus on the fundamentals of Indonesian businesses because they're growing healthily. Why wouldn't we be buyers of these types of businesses? It's our job to look at, support and buy great companies." — Pandu Sjahrir, Danantara's chief investment officer
The $5 billion pledge is aimed squarely at homegrown Indonesian companies. Danantara was launched by Indonesian President Prabowo Subianto as the country's sovereign wealth fund.
What MSCI's Proposal Means for Indonesia's Market
The timing of the pledge matters. MSCI has proposed downgrading Indonesia to standalone status. That proposal has already hit the market hard — the Jakarta Composite Index has fallen 11.6% since the news broke.
A downgrade to standalone status would affect how global investors view Indonesian stocks. But Danantara's leadership is not waiting for that decision to play out. The fund is moving ahead with its plan to put money into Indonesian businesses over the coming months.
- Danantara will invest $5 billion in Indonesian businesses over six to nine months
- The Jakarta Composite Index has dropped 11.6% after MSCI proposed a downgrade
- MSCI's proposal would move Indonesia to standalone status
- Danantara was launched by President Prabowo Subianto
Our Take: A Confidence Bet on Indonesia's Fundamentals
To put it plainly, Danantara is making a bold bet. When foreign index providers threaten to downgrade a market and the index drops 11.6%, most investors run. Danantara is doing the opposite — it is buying.
In our view, this is a signal worth paying attention to. A sovereign wealth fund putting $5 billion into local companies is not just about returns. It is about confidence. The fund's chief investment officer is saying publicly that Indonesian businesses are healthy and growing, even when the market says otherwise.
But readers should also see the risk. If MSCI goes ahead with the downgrade, foreign money could keep flowing out. Danantara's $5 billion may not be enough to stop that. The fund is betting that fundamentals will win in the end. That is a bet only time will settle.
What this means for ordinary investors is simple: watch what Danantara actually buys, not just what it promises. The pledge is a starting point. The real story will be in the deals that follow.
