The recent establishment of Danantara, Indonesia’s new sovereign wealth fund, has generated significant public interest but also a degree of concern. Such reactions are understandable in a country with Indonesia’s complex political and economic landscape, where large-scale institutional innovations often provoke skepticism and uncertainty. However, it is important to recognize that sustainable national growth requires bold and strategic shifts. While Danantara may represent a departure from traditional economic management, it is not without precedent. A historical perspective reveals a notable parallel in Indonesia’s past that can offer valuable insights into the present.
Indonesia has historically turned to elite technocrats and centralized state power in times of needed economic transformation. One significant case in its post-independence history illustrates this strategy: President Suharto’s use of the so-called “Berkeley Mafia” during the New Order regime can be compared to President Prabowo Subianto’s establishment of Danantara. Although the historical contexts differ – the former emerging from Cold War politics, recession, and hyperinflation, and the latter amidst global economic realignment and the rise of strategic sovereign wealth funds – both initiatives reflect a common political and economic strategy: entrusting national economic transformation to well-educated, globally connected elites under strong presidential control.
Danantara’s leadership has drawn particular attention due to its academic pedigree: over 40 percent are graduates of Ivy League institutions, while many others hold degrees from Western universities. This concentration of elite education has led some observers to dub the group the “Ivy League Mafia,” echoing the circles of foreign-educated experts that surrounded Suharto during his more than 30 years in power.
The Berkeley Mafia: Technocratic Stabilization in the Suharto Era
The events of late 1965 led to political upheaval and an economic crisis marked by soaring inflation, depleted reserves, and collapsed investor confidence. General Suharto emerged as a key figure, consolidating power and turning to Western-educated economists, many trained at the University of California, Berkeley.
Influenced by Western models promoting fiscal discipline and global integration, the Berkeley Mafia implemented macroeconomic reforms that stabilized the currency, curbed inflation, and restructured the economy. Supported by the United States, the World Bank, and the International Monetary Fund, they laid the foundation for Indonesia’s Five-Year Development Plans, which focused on economic and industrial development.
While effective in restoring stability and growth in the 1970s and 1980s, these policies also enabled crony capitalism. Suharto’s regime concentrated economic power in a small elite, facilitating corruption. The technocrats had freedom in shaping policy but operated within Suharto’s authoritarian framework – a model seen in other fast-growing Asian economies at that time.
Danantara: Nation-Building through Sovereign Wealth in the Prabowo Era
Fast forward to 2025, and Indonesia is once again pursuing an ambitious economic transformation under President Prabowo. Danantara was created to unlock the value of Indonesia’s state-owned enterprises (SOEs), attract investment, and raise GDP growth from 5 percent to 8 percent by 2029.
Established via legislative amendment and operating under direct presidential authority, Danantara began with $20 billion in capital and manages the state’s stakes in major SOEs like Pertamina, the state power utility PLN, and Bank Mandiri – potentially overseeing up to $900 billion in assets.
Of the 22 members of Danantara’s management team, nine are Ivy League alumni. Most of the remaining team hold degrees from other Western universities, reinforcing their global experience. This Ivy League Mafia symbolizes Indonesia’s continued reliance on foreign-educated technocrats.
Like the Berkeley Mafia, Danantara’s team reflects a technocratic solution to developmental challenges. In the 1960s, Western-trained economists offered credibility to attract foreign partners. In a similar way today, Danantara’s elite team intends to signal confidence to global investors. Unlike the reactive approach of the 1960s, however, Danantara is a proactive strategy modeled after Gulf sovereign wealth funds, aiming to invest in energy, AI, food security, and critical minerals.
Parallels in Strategy and Structure
Despite different historical contexts, both the Berkeley Mafia and Ivy League Mafia share common elements
Both rely on elite technocratic leadership, in the form of internationally educated experts with strong global networks.
Both operate under centralized presidential oversight. Suharto kept control over the Berkeley Mafia while allowing autonomy – much like Prabowo with Danantara’s Ivy League Mafia.
Both initiatives aimed to modernize Indonesia’s economy, though the Berkeley Mafia prioritized stabilization, while Danantara emphasizes technological self-sufficiency and competitiveness.
Both leverage state assets to achieve their goals. Suharto initially used SOEs to drive industrialization before shifting toward the private sector and foreign investment. Prabowo intends to use Danantara to strategically consolidate and optimize SOEs, while still attracting private and foreign investment.
Finally, both sought credibility abroad, hoping that international credibility would boost investment. The Berkeley Mafia turned to Western governments and institutions; Danantara is partnering with Gulf funds and global capital.
Differences in Context and Execution
However, important differences must also be noted.
The Berkeley Mafia operated under authoritarianism; Danantara functions in a democracy, albeit one with rising concerns about executive overreach.
The Cold War shaped the 1960s; today’s world features multipolar politics, decarbonization, and economic nationalism.
The Berkeley Mafia’s agenda was largely reactive — to rescue a collapsing economy. Danantara is forward-looking and strategic, designed to re-engineer Indonesia’s position in global supply chains.
The Berkeley Mafia operated in an era with limited public scrutiny. Danantara, by contrast, triggered immediate market reactions, reflecting investor concerns over governance and fiscal impact.
Structural Risks and Governance Challenges
While both the Berkeley Mafia and Ivy League Mafia represent bold, elite-led strategies for economic transformation, they are not without serious structural risks and governance challenges that could undermine their intended outcomes.
The Berkeley Mafia was often criticized for being elitist and detached from the realities of everyday Indonesians. The Ivy League Mafia faces similar concerns over opacity and SOE dividend redirection.
Under Suharto, the Berkeley Mafia faced little oversight, leading to concentrated power. Danantara faces similar risks, as audit bodies lack full authority. Ensuring transparency requires independent audits, stronger laws, public reporting, and an oversight board.
Like the Berkeley technocrats, Danantara’s leaders shouldn’t be punished for unforeseeable setbacks. But if performance repeatedly lags, they should be replaced – not criminalized – to preserve credibility and discipline.
Suharto’s developmental gains were accompanied by entrenched patronage networks. Without strict safeguards, Danantara risks similar elite capture, especially given its centralization of state capital and influence.
Both eras reveal the risks of sidelining democratic or bureaucratic checks in favor of executive dominance. Centralized decision-making, even when efficient, can lead to corruption or mismanagement without institutional balance.
Danantara’s Strategic Sectors and Priorities
Danantara’s investments are positioned as nation-building tools, not just financial moves. They target sectors that boost GDP and self-sufficiency amid global supply chain instability and ascendant resource nationalism.
In utilizing Indonesia’s natural resources, the goal is to move up the value chain by focusing on the domestic refining of mining and EV-related materials like nickel, echoing Suharto’s 1970s strategy with oil and forestry.
With its emphasis on AI and tech infrastructure, Danantara seeks digital self-sufficiency, unlike the Berkeley Mafia which focused on foundational macroeconomic policy.
Danantara is investing in upstream gas, pipeline infrastructure, oil refining, and renewables to position Indonesia as a regional energy hub. The Berkeley Mafia leveraged Indonesia’s oil and gas resources to develop the economy.
Danantara also includes a focus on agriculture infrastructure and logistics, with the aim of reducing food import dependence and building rural economic resilience, which was also one of the Berkeley Mafia’s objectives.
All of these sectors represent long-term strategic bets aimed not only at generating returns but also at repositioning Indonesia within global supply chains.
Echoes of the Past, Aspirations for the Future
Danantara represents a pivotal moment in Indonesia’s economic trajectory, echoing Suharto’s reliance on the Berkeley Mafia through Prabowo’s appointment of foreign-educated technocrats. This leadership model blends historical continuity with modern investment strategies, aiming to position Indonesia as a regional leader in sectors like energy, AI, food security, and critical minerals.
While the Berkeley Mafia succeeded in stabilizing and growing the economy, Danantara’s centralized approach carries risks of elite capture, political interference, and weak oversight. Public concerns about limited auditing authority underscore the need for institutionalized transparency, including independent audits and clear reporting. The fund’s success hinges on its leadership’s ability to balance global best practices with domestic accountability and inclusive national benefit.
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