President Prabowo Questions Why State-Owned Enterprises Can Be Audited But Their Subsidiaries Cannot

President Prabowo Subianto has expressed puzzlement over regulations stating that state-owned enterprises (SOEs) can be audited by the state whilst subsidiary and grand-subsidiary companies cannot be subject to such audits. He subsequently questioned the basis of these rules.

This was stated by Prabowo during an address delivered at the first anniversary celebration of Danantara at Wisma Danantara in South Jakarta on Wednesday, 11 March 2026. Prabowo initially traced the history of state-owned enterprises, which were originally established with good intentions by the nation’s founders to meet strategic state needs following independence.

He provided examples from when Indonesia lacked textile industry capacity, when the government established state enterprises such as Patal Senayan. Similarly, when the state required paper for educational purposes, the government constructed paper mills.

“When we had no medicines at the time of independence, the state established pharmaceutical companies,” Prabowo stated.

However, Prabowo assessed that over time, some of these good intentions have been distorted. This has been particularly evident in the development of complex corporate structures through the creation of numerous subsidiary and grand-subsidiary companies.

He noted structures within Pertamina which, according to reports, possesses hundreds of derivative entities. “I was astonished; Pertamina has 200 subsidiary and grand-subsidiary companies,” Prabowo remarked.

Prabowo highlighted a regulation which he found peculiar. The regulation permits SOEs to be audited by the state, but this does not apply to subsidiary and grand-subsidiary companies. “And what is even stranger is that there are even more peculiar regulations. If SOEs can be audited by the state, allegedly subsidiary companies cannot be audited. Where do these regulations come from?” he asked.

“So, dear colleagues, our premise has proven correct: consolidation, unified management with rational standards and the best international standards, return on assets I receive above 300%. This still falls short of our targets,” Prabowo continued.