In early May, President Prabowo Subianto summoned a handful of his most trusted advisers to his house in south Jakarta to discuss how to find more revenue as surging oil prices stretched Indonesia’s finances.
The small group eventually agreed on a sweeping change that would fundamentally upend one of the most important sectors in the resource-rich Southeast Asian economy: The creation of a new state entity under sovereign wealth fund Danantara to oversee Indonesia’s world-leading exports of palm oil, coal and ferro-alloys, which together amounted to more than $65 billion last year.
Prabowo had long railed against Indonesia’s tycoons, accusing them of harnessing national wealth for personal gain. He believed drastic action was needed to plug leakages that cost Indonesia billions of dollars a year, according to people familiar with the inner workings of the president’s office. They requested anonymity to speak about private discussions, along with about a dozen others in government and industry circles who contributed to this account.
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