Economists have cautioned that investment projects under the State investment management agency BPI Danantara in 2026 could face lingering “crowding-out” risks, potentially dampening private sector investment.
Crowding out refers to an economic phenomenon in which increased government spending ‒ often financed through borrowing ‒ reduces private investment and consumption by absorbing available financial resources and pushing up interest rates.
Bank Central Asia (BCA) Chief Economist David Sumual said that, so far, no Danantara projects have fully materialized. This is despite the government having reallocated state-owned enterprise (SOE) dividends to Danantara and budget allocations to the Free Nutritious Meals (MBG) program. In his view, investment policies have yet to deliver optimal…
