Testing the Implementation of Good Corporate Governance in State-Owned Enterprise Management

State-Owned Enterprises (BUMN) have long been positioned as strategic instruments in Indonesia’s economic development. State enterprises are not merely business entities pursuing profit, but also serve as extensions of the state in executing vital economic functions.

BUMNs manage resources derived from separated state wealth, operate strategic sectors such as energy, infrastructure, banking and transport, and implement various national development programmes. In this context, the quality of BUMN governance is not merely a corporate matter, but also concerns the integrity of the state in managing public wealth.

Conceptually, BUMNs generally take the form of limited companies that are legal entities with assets separate from their shareholders, including the state. In corporate law doctrine, this asset separation is the primary characteristic of a corporate legal entity. Where a company has its own rights and obligations and can act independently in legal transactions through corporate organs such as shareholders’ meetings, boards of directors and supervisory boards. This separation simultaneously affirms that company management must be conducted professionally through clear and accountable corporate governance mechanisms.

Consequently, the application of Good Corporate Governance (GCG) becomes the foundation for BUMN management. Corporate governance is essentially a system that regulates how a company is directed and controlled to create a balance between the interests of shareholders, company management and other stakeholders.

Good corporate governance aims not only to improve company efficiency and performance, but also to ensure that every business decision is made transparently, responsibly and free from conflicts of interest.

In a global context, GCG has become a universal standard in modern company management. This concept emerged in response to various corporate crises caused by weak oversight, conflicts of interest and abuse of power by company management. Consequently, various countries developed principles of good corporate governance as instruments to safeguard the integrity of the corporate system.

In Indonesia, GCG principles applied to companies, including BUMNs, encompass five main principles: transparency, accountability, responsibility, independence and fairness. The transparency principle requires companies to disclose relevant information honestly to the public.

The accountability principle demands clear functions and accountability of corporate organs. The responsibility principle ensures that company activities comply with legal regulations. The independence principle affirms that companies must be managed without intervention by unauthorised parties. The fairness principle requires fair treatment of all company stakeholders.

The legal framework for implementing GCG in BUMNs continues to be strengthened by the government through various regulations. One important regulation is the Ministry of BUMN Regulation No. PER-02/MBU/2023 concerning the Implementation of Good Corporate Governance in BUMNs. This regulation updates guidelines for state enterprise governance by emphasising the strengthening of supervisory functions, corporate report transparency, risk management and improved management integrity.

This regulation details BUMNs’ obligations to build strong internal control systems, strengthen the audit committee’s role, enhance the effectiveness of the supervisory board’s functions and ensure that corporate decision-making is conducted professionally and free from conflicts of interest.

Additionally, each BUMN is required to conduct periodic assessments of GCG implementation through self-assessment mechanisms and independent evaluations.

This step demonstrates that the government increasingly recognises the importance of strong governance in maintaining the sustainability of state enterprises. Without good governance, BUMNs risk not only business inefficiency but also becoming a source of state losses.

In recent years, various cases within BUMNs have demonstrated that weaknesses in corporate governance remain a serious problem. Several studies indicate that GCG implementation in BUMNs is not yet fully optimal.

These weaknesses are evident in limited information transparency, less than optimal internal supervisory independence and merit systems that have not been fully implemented in appointing company officials.

This situation shows that the main challenge in implementing GCG in BUMNs no longer lies in the availability of regulations, but rather in consistent implementation at the practical level. In many cases, corporate governance remains influenced by various non-business factors, including political intervention and conflicts of interest that could undermine management independence.

In this context, the existence of Law No. 19 of 2025 concerning State-Owned Enterprises becomes highly relevant. This regulation does not merely introduce institutional changes to BUMNs, but also strengthens the legal accountability framework for state enterprise managers. One important point is the affirmation that BUMN boards of directors and supervisory boards operate within a public accountability regime inherent in managing separated state wealth.

This affirmation positions BUMN managers not only as organs of a corporation in the private sense, but also as parties executing public functions in managing separated state assets. Consequently, the management of BUMNs must comply with higher standards of integrity and accountability than would typically be required of private sector management.