Minister of Home Affairs Outlines Strategic Steps to Strengthen Regional-Owned Enterprises Before Parliament
There are several strategic efforts to ensure that Regional-Owned Enterprises (BUMD) can become healthy, including within the financial sector and the commitment of owners regarding capital injections in accordance with regional regulations, Tito stated in a written briefing on Wednesday (3/6/2026).
Regarding the financial aspect, Tito emphasised the importance of implementing performance targets followed by profit targets of at least above bank interest rates. Additionally, the boards of directors of BUMDs need to 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,” he noted.
On the operational aspect, Tito also encouraged local governments to conduct investment analyses aligned with business plans, as well as the work plans and budgets of BUMDs. Furthermore, the formation of competent, transparent, and accountable selection teams is considered essential to produce professional BUMD management.
From an administrative perspective, Tito emphasised the importance of preparing business plans and work plans and 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 needs to be sufficiently strict supervision and guidance,” he stated.
Furthermore, he revealed that the banking sector is one of the most profitable business lines for BUMDs. According to him, this achievement is supported by good corporate governance and professional human resources. Additionally, the selection process for directors and commissioners in the BUMD banking sector must follow the regulations set by the Financial Services Authority (OJK).
“However, in other fields, we do not see regulations that make the recruitment mechanism more reliable. This ultimately remains heavily dominated by the role of regional heads as shareholders,” he said.
Reflecting on these conditions, Tito stated that the government continues to strive to strengthen the guidance and supervision of BUMDs. One such effort is through the proposed amendment to Government Regulation (PP) Number 54 of 2017 concerning BUMDs. Through this amendment, it is hoped that the functions of guidance and supervision can be carried out more optimally by Echelon I units within the Ministry of Home Affairs (Kemendagri).
“The Ministry of Home Affairs has also proposed strengthening this supervisory guidance so that BUMDs are handled by a Director General (Echelon I). Currently, it falls under the Directorate General of Regional Financial Development,” he concluded.
Also present at the meeting were the Chair and leaders of Commission II of the House of Representatives (DPR RI), Deputy Minister of Home Affairs Akhmad Wiyagus, Director General of Regional Financial Development Agus Fatoni, Director General of Regional Autonomy Cheka Virgowansyah, and other relevant parties.