SOE Consolidation and Justice for Workers

In the literature of bureaucratic reform, one question always arises: Who bears the cost of change? Whenever the government restructures institutions or state-owned companies, the easiest answer is often the workforce. They are the ones with the least voice, furthest from the decision-making rooms, and most easily reduced to numbers on a spreadsheet. That is why the statement by Dony Oskaria, Head of BP BUMN and concurrently COO of Danantara Indonesia, deserves to be read more than once. “We will not reduce any employees. They will become part of the consolidated companies. Because, it is not their fault.” The final, short sentence carries the heaviest meaning.

To understand why this commitment is not easy, one must first grasp the scale of the operation. Indonesia’s state-owned enterprise ecosystem currently encompasses around 1,077 entities: from holding companies to subsidiaries, sub-subsidiaries, and even great-grandchildren spread across nearly all sectors. This figure is not merely large; it is a reflection of decades of expansion policies often lacking deep evaluation, duplicative functions growing unchecked, and overlapping markets that harm efficiency without significantly benefiting anyone. Danantara is designing a consolidation that will trim this number to approximately 200 companies. This is not cosmetic simplification. It is major corporate surgery, a reorganisation rarely attempted in the private sector at this scale, let alone with a guarantee of no job losses.

Herein lies the real challenge. When 877 entities are merged or integrated, market logic typically dictates: cut redundancies, including the human ones. Danantara has chosen a different logic. Commitment without calculation is populism. In a public forum, Dony transparently laid out the numbers. Across all companies entering the streamlining process, the total annual labour cost is only around Rp2 trillion to Rp3 trillion. Meanwhile, the projected overall savings from this consolidation exceed Rp50 trillion. This means that even if all employees from the consolidated entities are fully absorbed into the resulting merged companies, the net savings would still be around Rp47 trillion. “So, in that case, I will just take all the employees. I still save Rp47 trillion,” he stated. That sentence was not rhetoric. It was the conclusion of a serious calculation process. And from a public policy perspective, this is a rare moment: when the morally correct choice also proves to be the economically sensible one. There is no trade-off to be forced. There is no dilemma between worker welfare and fiscal efficiency. Both can walk in step.