How the Middle East Became Central to Indonesia’s New Sovereign Wealth Fund

Thursday, 28 May 2026

Indonesia is entering a new financial era, and surprisingly, the Middle East is becoming one of its most important partners. The country’s new sovereign wealth fund, called Danantara Indonesia, is showing strong connections with Gulf countries like Saudi Arabia and the United Arab Emirates.

Instead of focusing first on financial centers like New York, London, or Singapore, Indonesia decided to build strategic investment relationships with the Middle East. And honestly, that decision says a lot about where the global economy is heading.

Danantara was officially launched in 2025 under President Prabowo Subianto. The fund was created to manage and grow Indonesia’s state-owned assets while attracting long-term foreign investment. In simple terms, Indonesia wants to become stronger financially and compete with major sovereign wealth funds from countries like Singapore and Saudi Arabia.

What makes Danantara interesting is its first major overseas investment. Instead of buying assets in Western countries, the fund invested in Mecca, Saudi Arabia. Through a partnership with Saudi developers, Danantara acquired the Novotel Makkah Thakher City hotel and nearby land close to Masjid al-Haram. The long-term plan includes developing thousands of hotel rooms and commercial facilities for pilgrims visiting the holy city.

This move was not random. Indonesia has the world’s largest Muslim population, and millions of Indonesians travel to Saudi Arabia every year for Hajj and Umrah. Investing in Mecca is not only about business profits, but also about cultural and religious connections. It creates a financial relationship that feels more personal and strategic at the same time.

The Middle East also has another important advantage: money. Gulf countries manage some of the world’s biggest sovereign wealth funds, powered by oil and energy revenues. According to several reports, Gulf sovereign wealth funds invested tens of billions of dollars globally in 2025, with Asia becoming one of their favorite destinations.

Indonesia clearly sees this opportunity. By building trust with Gulf nations early, Danantara hopes to attract long-term investment into Indonesian infrastructure, energy, tourism, and technology sectors. In return, Middle Eastern investors gain access to Southeast Asia’s largest economy and one of the world’s fastest-growing markets.

Saudi Arabia especially seems to be becoming a key partner. In 2026, Danantara and Saudi energy giant ACWA Power reportedly signed a massive agreement focused on renewable energy, green hydrogen, and water infrastructure projects. This shows that the partnership is expanding far beyond hotels and religious tourism.

Another reason the Middle East matters is geopolitical balance. Indonesia wants to strengthen its global economic role without depending too heavily on Western financial institutions. Building stronger ties with Gulf countries gives Indonesia more flexibility and influence in international investment networks.

At the same time, the Gulf region is also shifting its focus toward Asia. Countries like Saudi Arabia and the UAE are investing more aggressively across Asian markets as they diversify beyond oil. Indonesia fits perfectly into that strategy because of its huge population, growing middle class, and natural resources.

In the end, the relationship between Indonesia and the Middle East is becoming much bigger than simple business deals. It is a mix of religion, economics, politics, and long-term strategy.

Danantara’s rise shows that Indonesia is no longer just looking West for financial partnerships. The country is building a new economic direction — and the Middle East is right at the center of it.