Indonesia's State Firm Reform
Indonesia Initiates Massive State Enterprise Overhaul, Investigating 30 Years of Management
Key Points
Progress reports on the SOE consolidation show divergent figures: one source cites roughly 240–250 closures/mergers by mid-2026, while other reports indicate about 290 have already been closed or reorganized.
The Danantara sovereign wealth fund, created last year to manage state assets, reports there are 1,074 state-owned enterprises, with a target to dissolve more than 750 and leave no more than 300 by year-end.
Indonesia’s SOE assets were valued at roughly US$572 billion in 2023, comprising about 42% of the country’s GDP, underscoring the scale of the restructuring.
Overhead savings from the consolidation amount to about Rp50 trillion to date, with potential future savings of Rp70–80 trillion; the reductions cover directors’ and commissioners’ salaries, building and car rentals, and business travel.
Prabowo floated the idea of a special ad hoc court to investigate state-owned enterprises’ management and boards going back 30 years, and some reports mention a possible amnesty for those who repent.
Indonesian President Prabowo Subianto has pledged to shut or merge more than 750 state-owned enterprises, cutting the total from 1,074 down to roughly 250–300. He called it potentially "the largest corporate restructuring in the world," according to Morning Chronicle.
About 290 state firms have already been closed or reorganized. Prabowo wants the full overhaul done by year's end, though some targets stretch two years out. The government says the drive has already saved around 50 trillion rupiah in overhead costs, according to WFMZ.
Why Prabowo Is Targeting 'Unproductive' State Firms
Prabowo accused many state firms of faking profits while actually losing money. He said these companies exist only to enrich insiders, not to serve the public. Indonesia's SOE assets were valued at roughly US$572 billion in 2023 — about 42% of the country's GDP — making the scale of waste enormous, according to Head Topics.
Out of 1,074 state-owned enterprises, Prabowo says most add little value. The plan is to keep only those that are genuinely productive. The rest will be dissolved or folded into larger entities, Morning Chronicle reported.
Danantara Sovereign Fund Drives the Asset Overhaul
The Danantara sovereign wealth fund, created last year, is coordinating the restructuring of state assets. It is managing which firms survive, which merge, and which close. Danantara confirmed that 1,074 SOEs currently exist and set a hard cap of no more than 300 by year-end, according to Head Topics.
Savings so far total around Rp50 trillion. Those cuts come from slashing directors' and commissioners' salaries, cutting building and car rentals, and reducing business travel. Future savings could reach Rp70–80 trillion once the full consolidation is done, according to WFMZ.
Special Court Could Probe 30 Years of Mismanagement
Prabowo floated the idea of a special ad hoc court to investigate SOE boards and management going back 30 years. The goal would be to hold past leaders accountable for losses and fraud. Some reports mention a possible amnesty for officials who "repent," according to Head Topics.
The proposal signals that Prabowo sees the SOE problem as not just financial but criminal. No court has been formally created yet. But the threat alone marks a sharp shift in how Indonesia is treating state sector accountability, Fox 26 Medford reported.
Rapid Pace Raises Questions About Implementation
The timeline is aggressive. Prabowo wants most of the closures done by December 31. Progress reports show divergent numbers — one source counts roughly 240–250 mergers and closures by mid-2026, while other reports put the figure at about 290 already done, according to WFMZ.
The sheer speed of the overhaul raises questions about how well each closure is managed. Cutting more than 750 entities in months is a massive task. Governance experts are watching whether the process creates new problems — or just fewer, bigger ones, Morning Chronicle noted.
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