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

The reduction in the number of state-owned enterprises (SOEs) is expected to return them to their core business.

Jakarta (ANTARA) — Toto Pranoto, an economist from the University of Indonesia (UI), has assessed that Danantara’s policy of streamlining SOEs is the right move to raise the productivity and efficiency of the red-plate companies.

“The reduction in the number of SOEs is expected to return them to their core business,” Toto said when contacted by ANTARA from Jakarta on Wednesday.

He expressed hope that the measure would also reduce duplication among SOEs and improve the quality of oversight, so that the performance of the state-owned companies could be better going forward.

Toto also viewed that closing, merging and consolidating 250 SOEs by 31 July 2026 could reduce the burden of operating costs and capital expenditure, thereby generating savings for the state.

Furthermore, Toto said the success of SOE streamlining will be determined by how well the post-merger integration (PMI) process is carried out. This process includes standardising various operational functions and unifying corporate culture.

“If the PMI runs smoothly, then value creation is expected to materialise soon. However, if the PMI proceeds slowly and is fraught with challenges, then hopes of value creation at the consolidated SOEs become rather pessimistic,” Toto said.

President Prabowo Subianto, while delivering remarks at a Plenary Cabinet Session at the State Palace in Jakarta on Monday (20 July), stated that the state savings from closing, merging and consolidating 250 SOEs by 31 July 2026 would reach Rp50 trillion.

Those savings, Prabowo continued, come from routine overhead costs that no longer need to be paid, as the state would no longer have to pay the salaries of directors and commissioners, office rent and electricity, and other expenses of the 250 SOEs.

On that occasion, President Prabowo set a target that by the end of 2026, the number of remaining SOEs should be no more than 350, down from the original 1,077.

“They (Danantara, ed.) have agreed to it,” Prabowo said.

If the streamlining is realised, the President is confident the savings could approach Rp70 trillion to Rp80 trillion.

For that reason, the President is convinced that Danantara represents one of the achievements of his administration.