Efficiency Is Not Enough: SOE Development Needs a Long-Term Business Plan, Analyst Says

SOE analyst Herry Gunawan says the government’s move to streamline state-owned enterprises (SOEs) can generally improve business efficiency. He cautioned that the effort should be accompanied by an overarching development plan or roadmap to determine the direction of state-owned companies over the next five to ten years.

According to Herry, streamlining SOEs can reduce the overlap in business activities currently carried out by several state-owned companies. Through consolidation, businesses previously managed by multiple SOEs can be brought together to operate more efficiently.

“Generally, streamlining is beneficial in making SOE businesses more efficient. For example, a business that could be handled by one SOE is instead being run by two or three. One example is bottled drinking water, which was previously owned by seven SOEs. This is now to be brought together,” Herry told journalists in Jakarta on Sunday, 25 October 2026.

He said a similar situation had occurred in the hotel business, which had previously been run by almost all SOEs.

That business is now being consolidated under InJourney, he said, in the hope of improving efficiency and clarifying how it is managed.

Nevertheless, Herry stressed that consolidation alone would not be enough to build strong and competitive SOEs.

He said the government needed to set a clear strategic direction on which business sectors should be strengthened, developed or prioritised to support the needs of the national economy.

“However, I think there is a bigger issue that is important: deciding where these SOEs are meant to go. That still has not been done,” he said.

Herry said that, under the provisions of a new government regulation, BP BUMN and Danantara had a mandate to draw up a medium- and long-term development plan for SOEs.

The plan, he stressed, should set out the form and business focus of SOEs over the next five to ten years.

One consideration should be strengthening SOEs to support import substitution. Herry said the government first needed to identify the largest imported commodities and determine where the national industry was weakest and needed improvement.

He cited imports of refined oil products, including fuel, saying these should be assessed in light of domestic processing capacity and capability, particularly at oil refineries.

“Will there be an SOE focused on import substitution? For example, our largest imports are refined oil products, including fuel. Where are we weakest? If the weakness is in processing, in refining, that needs to be planned for first,” he said.

According to Herry, if the assessment finds that Indonesia’s main weakness lies in oil-processing capacity, SOE business development should be directed towards strengthening the refining sector.

That would allow investment and business-development policies to address fundamental problems in the structure of the national industry, he said.

“It would be pointless to import raw materials if our refineries are not strong enough,” he stressed.

For that reason, Herry said the main shortcoming in the current drive to make SOEs more efficient was not consolidation itself, but the absence of a clear overarching plan to guide the process.

He said the government needed to produce a measurable roadmap so that streamlining did not stop at mergers, but also created a more strategic business structure, strengthened domestic industry and reduced dependence on imports.

“In other words, what is missing from the government’s efficiency drive is the creation of a framework—a broad plan for what the SOE landscape should look like. That is still missing, even though it is mandated by the government regulation,” Herry concluded.