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🇮🇩 Indonesia /Economy & Trade

Indonesia consolidates state firms to boost efficiency

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Sources not specified New plan
  • Indonesia's state-owned enterprise (BUMN) entities are being consolidated from over 1,000 to 200-300 companies to reduce business overlap and strengthen focus.
  • The policy, managed by the Investment Management Body for National Potential (BPI Danantara), aims to improve state asset management and company performance.
  • Experts and lawmakers support the consolidation, viewing it as a rational step to eliminate redundant entities and ensure strategic focus for state-owned businesses.

Indonesia is undertaking a significant consolidation of its state-owned enterprises (BUMN), aiming to reduce the number of entities from over 1,000 to a more focused range of 200-300 companies. This strategic move, spearheaded by the Investment Management Body for National Potential (BPI Danantara), is designed to eliminate business overlaps and sharpen the strategic direction of state-run firms.

Akbar Faizal, Executive Director of the Nagara Institute, views this policy as vital for streamlining operations and enhancing the performance of state assets. He stated that inputs from a recent discussion forum would be compiled into a book of critical recommendations for President Prabowo Subianto. Faizal emphasized that this consolidation presents a crucial opportunity to fundamentally reform the structure of state-owned companies, reduce redundancy, and optimize their contribution to the national economy.

We will create a book with critical notes to then submit to the president.

— Akbar FaizalAkbar Faizal, Executive Director of Nagara Institute, described the plan to compile recommendations for the president.

Economists and public policy observers largely support the initiative. Wijayanto Samirin, an Economic and Public Policy Observer at Paramadina University, called the decision to close irrelevant entities a "very appropriate step." He noted that a persistent issue with BUMNs has been the difficulty in shutting down entities that have lost their business relevance.

Lawmakers also back the consolidation. Gde Sumarjaya Linggih, a member of Commission VI of the Indonesian House of Representatives, stressed that the establishment of BUMNs should always be driven by strategic reasons and developmental functions. He suggested that the government should re-evaluate entities whose business activities can be adequately handled by the private sector. Linggih pointed out that BUMNs were historically created for reasons of security, scale, government assignments, and regional development, criteria that should guide BPI Danantara in restructuring the national BUMN landscape.

When the government forms Danantara to cut and close the irrelevant ones, this is a very appropriate step.

— Wijayanto SamirinWijayanto Samirin, an Economic and Public Policy Observer, commented on the decision to close irrelevant BUMN entities.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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