Economist: Streamlining SOEs by Danantara will refocus companies on core business

An economist from the University of Indonesia (UI), Toto Pranoto, has assessed that the policy of streamlining state-owned enterprises (SOEs) by Danantara is appropriate for increasing the productivity and efficiency of managing these state-owned companies. “The reduction in the number of SOEs is expected to return them to their core business,” he said when contacted by ANTARA from Jakarta on Wednesday. He expressed hope that this step would also reduce duplication among SOEs and improve the quality of SOE supervision so that, in the future, the performance of these state-owned companies could improve. Toto also assessed that closing, merging, and consolidating 250 SOEs by 31 July 2026 could reduce the burden of operational costs and capital expenditure, resulting in state savings. Furthermore, Toto stated that the success of streamlining SOEs is determined by how well the post-merger integration (PMI) process can be executed. This process includes aspects of standardising various operational functions and unifying corporate culture. “If the PMI runs smoothly, value creation can be expected soon. However, if the PMI runs slowly and is full of challenges, then the hope for value creation in the consolidated SOEs is somewhat pessimistic,” said Toto. President Prabowo Subianto, during a briefing at a Plenary Cabinet Session at the State Palace in Jakarta on Monday (20/7), stated that the state money saved after closing, merging, and consolidating 250 SOEs by 31 July 2026 would reach IDR 50 trillion. Prabowo continued that these savings represent routine costs (overhead costs) that can be saved because the state no longer needs to pay the salaries of directors and commissioners, pay for building rent and its electricity, and other expenses from those 250 SOEs. On that occasion, President Prabowo then targeted that by the end of 2026, the number of remaining SOEs would be a maximum of 350, down from the original 1,077 SOEs. “They (Danantara) have agreed,” said Prabowo. If this streamlining is realised, the President is confident that the money saved could approach IDR 70 trillion to IDR 80 trillion. Therefore, the President also believes that Danantara is one of the achievements of his administration.