The Prabowo Subianto-Gibran Rakabuming Raka administration is reportedly set to transform the Ministry of State-Owned Enterprises (SOEs) into a Non-Ministerial Government Institution (LPNK).
Experts suggest that this restructuring could enhance profitability and advance the operations of state-owned enterprises.
Toto Pranoto, Associate Director of the BUMN Research Group at the University of Indonesia’s School of Economics and Business, noted that the proposal to restructure the SOE Ministry is not new.
This idea was initially proposed by Tanri Abeng, who served as the SOE Minister from 1998 to 1999, during Indonesia’s transition from the New Order to the Reform Era. At that time, Tanri was tasked with establishing the Ministry of State Utilization of SOEs.
Tanri’s blueprint envisioned maintaining the ministry from 2000 to 2010, after which it would evolve into a super holding entity overseeing all state-owned enterprises, independent of political interests.
“In essence, the nomenclature of the ministry was to be the SOE Ministry, which would also act as the Operational Management Agency for SOEs,” Toto said as quoted by Katadata.co.id on Thursday, September 26, 2024.
Tanri had discussed the need for a clear distinction between regulatory functions regarding SOEs and execution tasks.
The ministry would focus on rule-making, while business execution, such as corporate actions, would be handled by the agency itself.
The aim was to enable SOEs to operate more agilely compared to direct ministry oversight. However, this idea did not materialize due to Tanri’s brief tenure.
According to Toto, discussions about the restructuring of SOEs into a separate agency resurfaced about two years ago, although no concrete steps have been taken since then.
“Perhaps pak Prabowo believes that having execution within the SOE ministry is too bureaucratic and lacks agility,” he said.
Currently, several state-owned enterprises are undergoing restructuring, mergers, and forming holding companies. Thus, LPNK is expected to function as an executive body managing all state enterprises.
This model resembles Malaysia’s Khazanah or Singapore’s Temasek, with Toto suggesting that LPNK may lean more towards the Khazanah approach, focusing on commercial objectives to maximize profits, while some SOEs will still prioritize public interest.
The discussion about restructuring the SOE Ministry gained traction when Burhanuddin Abdullah, a member of the advisory council for President-elect Prabowo Subianto, delivered a speech at the UOB Economic Outlook 2025 on Wednesday, September 25, 2024.
Burhanuddin indicated that the new administration plans to implement institutional transformation for the SOE Ministry, noting that the total assets of SOEs amount to approximately US$1 trillion.
According to the performance report of state-owned enterprises, their total asset portfolio reached Rp10,401.50 trillion (US$684.94 billion), reflecting a 6.26 percent annual increase.
Additionally, SOEs recorded a current year profit of Rp327.12 trillion, a 5.8 percent rise compared to 2022.
Burhanuddin emphasized the substantial value of SOEs’ assets, while also pointing out that their contributions to the state remain inadequate.
Therefore, he called for transformations in business practices, culture, and management.
“This is what we will aim to accomplish starting in January,” Burhanuddin said.
