In Meeting with House of Representatives, Minister of Home Affairs Outlines Strategic Steps to Strengthen Regional-Owned Enterprises
The Minister of Home Affairs, Muhammad Tito Karnavian, has outlined several strategic steps to enhance the long-term health of Regional-Owned Enterprises (BUMD). These strategies encompass three primary aspects: finance, operations, and administration.
“There are several strategic efforts to ensure BUMD can become healthy, including within the financial sector, such as the commitment of owners regarding capital injections in accordance with regional regulations,” stated the Minister during a Working Meeting and Hearing with Commission II of the House of Representatives (DPR RI) at the Parliament Complex, Senayan, Jakarta, on Wednesday, 3 June 2026.
Regarding the financial aspect, the Minister emphasised the importance of implementing performance targets accompanied by profit targets of at least above bank interest rates. Furthermore, BUMD boards of directors must implement operational cost efficiencies by maintaining the Operating Expense to Operating Income (BOPO) ratio below 85 per cent.
“Secondly, in addition to financing, from an operational standpoint, routine customer satisfaction surveys should be conducted, because the customer is king,” the Minister added.
On the operational aspect, the Minister also encouraged local governments to conduct investment analyses that align with business plans, as well as BUMly work plans and budgets. Additionally, the formation of competent, transparent, and accountable selection teams is considered vital to producing professional BUMD management.
From an administrative perspective, the Minister stressed the importance of preparing business plans and work budgets that align with the targets set by shareholders or capital owners. BUMDs must also conduct General Meetings of Shareholders (RUPS) according to schedule, with the presence of shareholders meeting the required quorum.
“In addition, there must be sufficiently strict supervision and guidance,” the Minister noted.
Furthermore, the Minister revealed that the banking sector remains one of the most profitable business lines for BUMDs. He noted that this achievement is supported by good corporate governance and professional human resources. Moreover, the selection process for directors and commissioners in the BUMD banking sector must adhere to the regulations established by the Financial Services Authority (OJK).