Prabowo Surprised by Rule Preventing Audit of State Enterprise Subsidiaries: Where Does This Regulation Come From?

Jakarta — President Prabowo Subianto expressed bewilderment at the existence of a regulation that prohibits auditing of subsidiaries and sub-subsidiaries of State-Owned Enterprises (SOEs).

According to him, the regulation is peculiar, particularly when parent companies, which are government-owned enterprises, are required to undergo audits.

“And what’s even stranger is there are even more unusual regulations. If SOEs can be audited by the state, apparently grandchild companies cannot be audited. Where does this regulation come from?” Prabowo said while delivering remarks at the first anniversary celebration of Danantara Indonesia in Central Jakarta on Wednesday, 11 March 2026.

Such ad-hoc regulations potentially create loopholes for irregularities. Especially considering that a single SOE can have hundreds of subsidiaries.

“When the nation was newly independent, the founding fathers established a state enterprise called Pertamina. It turned out that the good intentions of those founders eventually gave rise to child companies, grandchild companies, and great-grandchild companies,” he explained.

“I was shocked to learn that Pertamina has 200 subsidiary and sub-subsidiary companies,” Prabowo added.

For that reason, Prabowo expressed gratitude that Indonesia now has the Danantara Investment Management Body (BPI), which manages SOEs and state-owned companies to the world’s best standards.

The body can be compared to Sovereign Wealth Funds (SWFs) globally. Its return on assets (RoA) has already increased by 300 per cent since its establishment a year ago.

However, according to Prabowo, Danantara’s current RoA of only 5 per cent falls far short of target objectives.

A well-functioning company ideally should maintain an RoA standard of 10 per cent, or even 12-15 per cent.

“If it’s good at 12 per cent, if it’s excellent at 15 per cent. We should have a good target of 10 per cent. But we understand that in the initial years we might not be able to achieve that,” Prabowo concluded.