Danantara Can Be Funded by State Budget - Deficit Risk and Investor Flight | Langit Eastern

02 July 2026 • • min read

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📋 SUMMARY: Indonesia's Government Regulation No. 19/2026 allows the state budget (APBN) to inject capital into Danantara, the sovereign wealth fund. Economists warn this will increase the fiscal deficit and erode investor confidence. Danantara has also failed to publish its 2025 financial statements, raising transparency concerns.

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Government Regulation Number 19 of 2026, signed by President Prabowo Subianto in April 2026, introduces a fundamental shift in how Danantara is financed. Article 31A(1) explicitly states that the state can provide capital participation to the Danantara investment holding company sourced from the State Budget (APBN). This participation includes not only fresh funds but also state-owned goods and other assets.

Andri Perdana, an economist from Bright Institute, argues this policy will overburden the state budget. Danantara had already been taking dividends from state-owned enterprises (BUMNs) that should have gone to the state treasury. The additional APBN injection compounds the fiscal strain. He questions Danantara's very purpose if it requires state budget funding to operate.

From an investor perspective, this policy raises serious red flags. Nailul Huda from Celios warns that using APBN for Danantara creates moral hazard since the holding company does not need to prove business viability to receive funding. Foreign investors tend to avoid countries with opaque fiscal practices. Indonesia's investor confidence index could decline if this policy is not accompanied by strict oversight.

Seira Tamara, a researcher at Indonesia Corruption Watch (ICW), notes that Danantara's formation was already marred by legal loopholes. There was no public participation in the revision of the BUMN Law that enabled Danantara's creation. As of June 2026, Danantara's 2025 financial statements and annual report have not been published. This lack of transparency reinforces concerns about the institution's accountability.

Celios analysis shows that Danantara's oversight structure is inadequate for an institution managing assets worth US$ 1,000 billion (approximately IDR 17,600 trillion). Without proper transparency and supervision, the risk of misusing state budget funds increases significantly. Investors need legal certainty and clear governance before committing capital to Indonesia.