Ray Dalio, Jeffrey Sachs Tapped To Advise Indonesian Sovereign Wealth Fund During Economic Fallout

Indonesia has tapped Bridgewater Associates’ Ray Dalio and economist Jeffrey Sachs to advise its new sovereign wealth fund amid concerns about its governance. Indonesia’s stock market has tumbled in recent months.

What Happened: The Southeast Asian country’s wealth fund, Danantara, appointed the two Americans as advisors on Monday, according to the Financial Times.

Investors are reportedly concerned that the fund’s direct control by President Prabowo Subianto could jeopardize the fund’s integrity from political interference and transparency. Danantara consolidates state-owned banking, energy and telecom enterprises, worth $900 billion, aiming to invest $20 billion in minerals, AI, energy and food.

Why it Matters: Many of Indonesia’s largest state-owned enterprises are publicly owned. Investor concerns over governance have contributed to a more than 12% decline in the iShares MSCI Indonesia ETF (NYSE:EIDO) since Danantara's announcement in late February.

Dalio, founder of Bridgewater Associates, has long focused his fund on an analysis of macroeconomic factors. He is particularly interested in country debt and has recently repeatedly warned countries about the side effects of carrying a large debt load. Dalio, who built Bridgewater into one of the world’s largest hedge funds, is an intriguing choice given investor concerns about transparency.

Sachs, a professor at Columbia University, is notable for his continued support of expanding relations with China. Dalio has previously urged investors to pay close attention to the country as a worthy rival to the U.S. Their appointments come at a time when both China and the U.S. are vying for greater influence in Southeast Asia, making their roles in shaping Danantara’s strategy even more significant.

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