Realising State-Owned Enterprises as Primary Development Instruments - BUMN Governance Reset

Jakarta — A researcher from the Institute for Economic and Social Research at the Faculty of Economics and Business at the University of Indonesia (LPEM FEB UI), Mohamad Dian Revindo, has assessed the governance reset initiative undertaken by Danantara Indonesia towards state-owned enterprises (BUMN) as a positive measure. He views this effort as potentially forming the foundation for transformation processes that could position BUMN as an instrument of national development.

“Governance reset should not merely be confined to administrative remediation. Rather, it can realise the vision of transforming BUMN into a primary instrument of national development,” said Revindo in a statement.

Revindo characterises the governance reset in BUMN as possessing two concurrent dimensions: corrective and strategic. In the short term, he explains, measures such as balance sheet audits and financial statement reviews, or asset audits, constitute corrective actions to address longstanding BUMN challenges, including asset inefficiency, overlapping investments, and inconsistent governance quality across enterprises.

From a long-term perspective, Revindo contends that governance reset should constitute a strategic repositioning of BUMN, particularly to ensure the state retains effective control over strategic sectors affecting public welfare, such as energy, infrastructure, food, and logistics.

“Globally, many countries utilise state-owned enterprises as instruments of industrial policy and economic sovereignty. The OECD (2023 and 2024) notes that BUMN continue to play strategic roles in energy, transportation, and finance sectors across numerous nations,” Revindo explained.

Revindo believes that when Danantara Indonesia undertakes a reassessment of BUMN governance policy, this will attract market attention. For instance, he notes, there will be renewed confidence regarding whether BUMN can consistently meet international standards whilst prioritising transparent processes.

Should Danantara Indonesia proceed whilst upholding transparency standards, Revindo is optimistic that this governance reset can enhance BUMN credibility among investors and rating agencies. Conversely, Revindo warns, if the changes are perceived as cosmetic attempts to improve financial statements, this could trigger market uncertainty. “Alignment with global standards and transparency in public communication are therefore crucial,” he stated.

Revindo also urges Danantara Indonesia to conduct governance reset regarding management incentive systems, oversight mechanisms, and performance indicators based on value creation. This ensures that changes made by Danantara Indonesia extend beyond mere structural and administrative reorganisation. Should the changes remain confined to structural and administrative levels, Revindo fears this could provoke internal resistance.

“If changes are merely administrative, resistance will persist. However, if reform creates clearer and more professional incentives, adaptation typically occurs progressively. Various studies indicate that transformation success depends significantly on changes to management incentive and accountability systems,” Revindo concluded.

Previously, Danantara Indonesia outlined plans to implement governance reset across several BUMN. Through its subsidiary Danantara Asset Management (DAM), this governance reset will focus on comprehensive and structured assessment of BUMN enterprises. The process includes evaluation of accounting policies, asset quality and recording, strengthening governance systems, and integrated risk management to ensure management standards become progressively more robust and aligned with best practices.