Prabowo, 73, took office on Sunday and has since sworn in more than 100 people as ministers and deputies, heads of new institutions and advisers.
The Daya Anagata Nusantara Investment Management Agency would be formed as soon as Prabowo gets parliamentary approval, Muliaman Hadad, a former chief of the Financial Services Authority who has been named head of the body, told reporters.
The structure of the agency is being discussed with other authorities, but the goal is for it to operate like Singapore's Temasek as a state-owned investment firm, said Hadad, who has also served as Indonesia's ambassador to Switzerland.
"The intention is so that investments that are scattered can be consolidated and can be leveraged," he said.
Currently, government holdings in state enterprises are managed by the State-Owned Enterprises (SOEs) Ministry. State companies in sectors such as banking, telecommunication, construction and mining play a dominant role in the economy.
Hadad said discussions about the new agency would involve the SOEs ministry as well as the country's sovereign wealth fund, the Indonesia Investment Authority.
After winning February's election, Prabowo told an investment forum in March that he was open to privatising non-strategic state firms to allow the private sector to take a bigger role in the economy, without providing more details.
Prabowo on Tuesday also named former World Bank managing director Mari Elka Pangestu as his special envoy on trade, and former chief investment minister Luhut Pandjaitan as his adviser on digitalisation of government.
Many of predecessor Joko Widodo's economic ministers were retained in Prabowo's "red and white cabinet," including highly-regarded finance minister Sri Mulyani Indrawati and chief economic minister Airlangga Hartarto, a move some analysts said would ensure policy continuity.
"Prabowo's experienced economic team provides a significant boost to investor confidence, setting a solid foundation for sound and prudent policymaking," said Brian Lee, an economist with Maybank Investment Banking Group.
Lee noted investors are still watching for Prabowo's initiatives to improve the investment climate and cut red tape.
Prabowo will have the biggest cabinet in the Southeast Asian country in decades. He will host his first cabinet meeting on Wednesday, and later this week will take cabinet members on a three-day retreat at a military academy in Central Java.
