Indonesia’s SOE Restructuring: Fewer Companies,greater Efficiency
Indonesia’s Minister of State-Owned Enterprises (SOEs),Erick Thohir,announced ambitious plans to significantly reduce the number of state-owned enterprises (BUMNs) from 47 to 30. This restructuring, he says, aims to boost efficiency and foster stronger partnerships with small and medium-sized enterprises (SMEs).
Speaking at BNI City Station on January 1, 2025, Thohir stated, ”Later, I will have a meeting at the Rapim next week. With the Deputy Minister, everyone.” The Rapim, or leadership meeting, will be crucial in finalizing the details of this major overhaul.
The plan,Thohir explained,will be presented to President Prabowo Subianto for approval. The goal is to create a more streamlined and efficient SOE sector,better equipped to collaborate with Indonesian SMEs. He added, “And we will submit the process to the President. That we will continue to make existing BUMNs more efficient. So that we will continue to increase cooperation with private MSMEs.”
Beyond the reduction in the number of SOEs, Thohir also revealed plans to regulate government tenders. A proposed ministerial regulation, currently under review by the Minister of state Secretary and Cabinet Secretary, woudl prohibit SOEs from bidding on tenders under 15 billion Indonesian Rupiah.This initiative aims to open up opportunities for smaller businesses. “We have even pushed for a Ministerial regulation…regarding tenders under IDR 15 billion. if the President approves it, we will give it to MSMEs,” Thohir confirmed.
Thohir emphasized that the restructuring is designed to create a more balanced and open market. He stated, “what does that mean? with an open market, balance occurs, between the private sector, MSMEs, and also foreign and domestic investment, this is what we are trying to balance.But we ensure that support for MSMEs must continue to be encouraged, because that is the foundation that we see.”
This initiative has significant implications for the Indonesian economy, mirroring similar efforts in other nations to foster SME growth and create a more competitive business environment. The success of this restructuring will depend on effective implementation and the government’s commitment to supporting SMEs.
Indonesia’s SOE Restructuring: An Interview with Dr. Anika Wijaya
Senior Editor: Welcome back to “World Today.” Today, we have Dr. Anika Wijaya, an economist specializing in southeast Asian markets joining us to discuss Indonesia’s ambitious plans to restructure its state-owned enterprises.Dr. Wijaya, thank you for taking the time.
Dr. Anika Wijaya: It’s my pleasure to be here.
Senior Editor: Indonesia’s Minister of State-Owned Enterprises, Erick Thohir, announced plans to reduce the number of SOEs from 47 to 30. This is a important undertaking. What are the driving forces behind this restructuring?
Dr. Anika Wijaya: Absolutely. This move reflects a broader global trend of governments streamlining their SOE portfolios.In Indonesia’s case, the aim is twofold: to increase efficiency and foster a more vibrant private sector, specifically focusing on Small and Medium Enterprises, or SMEs. By consolidating and refocusing SOEs,the government hopes to create leaner,more competitive entities that can better serve the national economic goals.
Senior Editor: you mention SMEs. How does this restructuring directly benefit them?
Dr. Anika Wijaya: One significant change proposed is a ministerial regulation
that woudl prohibit SOEs from bidding on tenders under 15 billion Indonesian Rupiah. This directly opens up opportunities for smaller businesses to compete for government contracts. [1]
Senior Editor: That’s quite a shift. what are the potential challenges in implementing this restructuring?
Dr. Anika Wijaya: There are indeed challenges. The process of merging or consolidating SOEs will require careful planning and execution to minimize disruptions and ensure a smooth transition. There’s also a need to ensure openness and accountability throughout the process.Strong political will and effective dialogue will be crucial to garner public support and buy-in from all stakeholders.
[1]
Senior Editor: How do you see this restructuring impacting the Indonesian economy as a whole?
Dr. Anika Wijaya: This restructuring has the potential to positively impact the Indonesian economy in the long run. By creating a more competitive and diversified business environment, it can foster innovation, create jobs, and attract both domestic and foreign investment.
Ultimately, the success of this restructuring hinges on the government’s commitment to supporting smes and creating a level playing field for all businesses.
Senior Editor: Dr. Wijaya, thank you for sharing your insights on this crucial advancement. We appreciate your time.
