Not Promising Financial Profits, Patriot Bonds More Than Just Bonds

JAKARTA The Anagata Nusantara Power Investment Management Agency or Danantara has prepared the issuance of Patriot Bond to support national development funding. However, economists think Patriot Bond is a unique financing instrument.

After the central and local governments, state-owned companies, and private companies competed to issue debt securities or bonds, now it's Danantara's turn to show off by releasing a new debt letter called Patriot Bond.

Danantara Indonesia Chief Investment Officer Pandu Sjahrir said Patriot Bond was designed as a form of collaboration between the government and national business groups to contribute to economic transformation.

"Danantara Indonesia is committed to carrying out its mandate as a manager of state investment with prudence, transparency, and good governance," Pandu wrote.

However, even though it has not actually been released, Patriot Bond has become a topic of conversation. Patriot Bond is said to be a number of economists more than just ordinary bonds.

Patriot Bond is the first debt letter issued by Danantara and consists of two series, namely a tenor of five years and seven years. Danantara invites big business actors to buy Patriot Bond and support national development financing.

Quoting Kompas, Patriot Bond is included in a major strategy to support the financing of long-term strategic projects. The project includes energy transitions, waste management, and job creation in high-value waste sectors.

This strategic financing instrument such as Patriot Bond is commonly used in various countries, such as Japan and the United States (US) to strengthen the independence of national funding.

The sale of Patriot Bond is scheduled to take place on October 1, 2025, with a fixed coupon of two percent. This coupon rate is far below the benchmark interest rate of Bank Indonesia which is in the range of 5.8 percent and lower than similar government bonds with a result of around 6.1 percent.

This debt securities will not be sold in the financial market, but will be offered with a priority placement scheme specifically for national entrepreneurs. Danantara is said to be targeting fresh funds of around IDR 50 trillion.

Government representatives are said to have met several conglomerates on August 23, 2025. Entrepreneurs are even claimed to have agreed to participate in the patriot bond and will invest IDR 2 trillion to IDR 3 trillion per person. Quoting Antara, some of these conglomerates are Prajogo Pangestu, Franky Widjaja, to Boy Thohir.

At first glance, this new financial instrument does not promise competitive profits. Investors who only consider the financial aspect may be reluctant to touch Patriot Bond.

However, it is another story if Danantara, which is backed up by the government, promises non-financial returns, which could exceed the financial gains on paper.

Deputy Chairperson of the Indonesian Employers' Association, Sanny Iskandar, said that investment instruments are the way for Danantara and the government to ask entrepreneurs to support development, especially in the green economy sector. Therefore, said Sanny, the first offers were big entrepreneurs.

Although the returns were below average, Sanny said, entrepreneurs considered non-financial value when buying Patriot Bond. He gave an example of the positive impact on the environment when the funds from this debt securities were used in environmentally oriented projects.

However, Sanny highlighted the need for incentives from the government to investors who bought Patriot Bond because these bonds do not promise greater profits than other investment instruments. He hopes that the government will provide incentives, such as ease of licensing.

"Maybe there are other incentives that can be given," said Sanny.

Director of the Center of Economic and Law Studies (CELIOS) Bhima Yudhistira assesses Patriot Bond as a unique financing instrument, because it has coupons that are far below the government's bond coupon average.

"Instead of using risk-based investment logic and returns, the purchase of this instrument by Indonesian conglomerates is driven by political tendencies," Bhima said in a written statement received by VOI.

"Patriot Bond is political insurance for conglomerates so that their business is not disrupted," he continued.

According to the view of the Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti, Danantara's plan to issue Patriot Bond is at high risk. This instrument has the potential to make the state carry out the practice of digging holes because the financing design is not in line with the character of infrastructure projects.

The tenor of debt securities is considered too short, even though infrastructure projects generally require a period of a minimum capital return of 10 years.

The use of short-term instruments for long-term projects causes mismatch in financing. Short-term financing is not suitable for public infrastructure projects because projects have the potential to not be able to generate profits (returns) when debt is due.

Esther also emphasized the importance of a feasibility study before the issuance of bonds next month. This bond nursery must also be delivered clearly to the public, starting from the issuance plan, program planning, regulatory deposits, to the allocation of funds collected through financial instruments.

Transparency to the public is a must in order to avoid misuse of funds. Regarding transparency, Bhima Yudhistira said Danantara must learn from similar instruments in the US, namely War Bond and EE Bond.

For information, War Bond is aimed at financing war, while EE Bond is for anti-terrorism financing. However, both have drawn criticism about transparency in the use of funds that are not related to their initial goals.

According to Bhima, this may happen to Patriot Bond. This means that openness is important so that the use of funds in the Danantara can be known to the public.