Indonesia's SOEs Face Efficiency Challenges Amid Weak Oversight
The dominance of global corporations now centred in Beijing, China, starkly contrasts with the state of Indonesia’s State-Owned Enterprises (SOEs). Beijing is home to 47 giant companies in the 2025 Fortune Global 500 list, surpassing the combined total of Tokyo and New York, as reported by Money. Major firms such as State Grid, CNPC, and Sinopec hold overseas assets worth 13.9 trillion US dollars.
This situation contrasts with Indonesia’s SOEs, which, after the transition to the State-Owned Enterprise Management Agency and the launch of Danantara in the first quarter of 2026, are still struggling with fundamental efficiency. While China’s SOEs are actively dominating global supply chains, Indonesia’s SOEs continue to face serious challenges in performance structures and profitability.
Data from the first quarter of 2026 reveals significant performance disparities across sectors in the Danantara era. The banking sector achieved a 12.5 per cent growth in net profit. However, the chemicals and pharmaceuticals industry faces heavy margin pressures, despite sectoral growth of 11.65 per cent.
A report from the Directorate General of Chemicals, Pharmaceuticals, and Textiles Industry (IKFT) indicates that the contribution to Gross Domestic Product (GDP) remains stable at 3.82–3.93 per cent. Nevertheless, SOE corporate efficiency is still constrained, with Return on Assets (RoA) levels only in the 1–2 per cent range. This low profitability is largely due to reliance on upstream raw material imports and high energy logistics costs, which hinder the synchronisation of the economic engine with global investment strategies.
The Illusion of the Super Holding and Oversight Challenges
The establishment of the State-Owned Enterprise Management Agency and the launch of Danantara as the embryo of a Sovereign Wealth Fund (SWF) in Indonesia, while promising, faces major challenges. Theoretically, Danantara is expected to consolidate strategic assets for global market penetration, with ambitions to allocate 20 per cent of capital for overseas investments and a dividend target of up to 10 billion US dollars.
However, the success of such institutions heavily depends on a strong legal foundation and protection from short-term political dynamics, as quoted from the South China Morning Post. Many advanced countries have SWFs that operate with purely professional investment mandates. Danantara itself has a mission to align regulatory and operational roles to avoid overlapping regulations that often hinder business initiatives.
China’s successful SOE performance is inseparable from strict oversight functions. Through the State-owned Assets Supervision and Administration Commission (SASAC), China has built a robust accountability system. According to the latest data from the South China Morning Post, SASAC has even formed a special bureau to oversee foreign investments, in response to rising global geopolitical tensions. This demonstrates that global expansion is not just about capital, but also about the ability to control risks.
Enhancing Accountability and Supply Chain Resilience
The new bureau formed by SASAC has crucial mandates, from directing international operations to handling emergency crises in host countries. China recognises that with 64.6 per cent of foreign investment stock controlled by state assets, failures abroad could pose a serious threat to their economic sovereignty.
In contrast, oversight of SOEs in Indonesia remains reactive. Domestic policy research published by the Directorate General of IKFT in January 2026 highlights vulnerabilities in upstream industries. Without upstream-downstream integration supported by energy supply certainty, such as through consistent Certain Natural Gas Price (HGBT) policies, the financial performance of SOEs in the industrial sector will remain stagnant amid global energy price fluctuations reaching 100 US dollars per barrel.
Additionally, independent research following the dissolution of the Ministry of SOEs in October 2025 reveals coordination gaps in overseeing overseas investment risks. Although Danantara has explored partnerships with the Qatar Investment Authority and China Investment Corporation (CIC), without early detection mechanisms for geopolitical crises like those possessed by SASAC, state capital allocated risks becoming trapped in regional crises.
Indonesia currently has an opportunity to refine its SOE oversight mechanisms. What is crucially needed is strengthening anti-corruption institutions through more supportive legislative synchronisation. With robust legal integrity, Danantara’s global partnership ambitions can be realised strategically. Professionalism in transparent governance will be the key for Indonesia’s SOEs to compete on the global stage.