Erick Thohir's three strategies to build stronger SOEs
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Tiga strategi Erick Thohir bangun BUMN makin kuat
3 January 2023
Jakarta - State-owned Enterprises (SOE) Minister Erick Thohir affirmed that Indonesia needed healthy corporations to act as fortresses for economic resilience amid wars between countries that no longer use weapons but are economic wars. Hence, SOE Ministry is preparing long-term initiatives for SOEs so that domestic company management can be maintained excellently and sustainably.
There are three incentives prepared, SOE roadmap phase 2 (2024-2034), SOE omnibus deregulation, as well as SOE director track record and blacklist.
For SOE roadmap, Erick explained that his agency would consolidate SOEs to cut the number of companies to 30. “For SOEs with similar businesses, why are two companies required?” Erick said during his discussion with Media Update themed SOEs 2023, Growing and Strong for Indonesia in Jakarta on Monday (2/1/2023).
During the occasion, SOEs were also directed to continue developing to build ecosystems with other economic players. “Hence, SOEs no longer sit in their ivory towers. We will continue to build ecosystems so that SOEs can cooperate with regional governments or private companies. SOEs must grow as they will be fortresses during SOE crisis,” Erick said.
By growing SOEs, Erick believes that state-owned companies can be machines that create a new middle class. The middle class in Indonesia is expected to continue to expand to 100 million. “Who is the middle class? Yes, our MSMEs (micro, small, and medium enterprises). Meanwhile, we will direct large companies to be global corporations to strengthen national economic resilience,” he said.
Meanwhile, for the second initiative, SOE omnibus law, Erick emphasises his focus on regulations in the SOE Ministry that were general and abstract to be more focused on the 3 clusters of ministerial regulations. The three clusters are governance guideline, risk control, and SOE healthiness rate measurement cluster.
Then, management and supervision cluster and SOE assignment cluster. “Currently, there are 45 regulations. No one reads them. Later, we will make them to only be 3 [ministerial regulations] that directors and commissioners must remember,” Erick stated.
The third initiative is blacklist arrangement. Erick mentioned that there were two criteria for SOE directors to be included in the blacklist. First, if they are suspects, defendants, or stated guilty for costing the firm’s or the state’s finances. Then, if they have a bad track record in managing an SOE’s performance. “Removal from the list and track record can only be conducted by the President,” Erick said.
