Indonesia Sets Up Agency To Transform SOE's Management, Boost Economy

(MENAFN- IANS) Jakarta, Feb 7 (IANS) Indonesia's investment landscape is entering a new chapter after the government and members of the House of Representatives passed the Third Amendment to Law Number 19 of 2003 concerning State-Owned Enterprises (SOEs) on Tuesday.

A key element of this amendment is the establishment of the Daya Anagata Nusantara Investment Management Agency (BPI Danantara), a strategic agency tasked with managing SOEs operationally and optimising dividend management to support the government's economic goals.

"BPI Danantara will manage SOEs operationally and optimise dividend management to assist the government in achieving the 8 per cent economic growth target," Minister of State-Owned Enterprises Erick Thohir said at the House of Representatives Plenary Meeting in Jakarta.

The establishment of the agency is part of a broader transformation effort to consolidate SOE management, enhance investment efficiency, and improve operational performance through initiatives such as operational holdings, restructuring, privatisation, formation of subsidiaries, and/or dissolution of SOEs.

The bill's ratification grants BPI Danantara the authority to manage SOEs directly or in collaboration with third parties, positioning it as a potential investment vehicle for both local and global investors. This is further supported by Indonesia's large and growing market, as well as ongoing infrastructure projects.

From a legal perspective, the amendment provides regulatory certainty by affirming the status of SOE assets as separated state assets, enabling more agile corporate actions. It also emphasises good corporate governance and accountability in managing SOE assets, in line with existing laws and regulations.

Additionally, the amendment includes provisions to promote inclusivity in SOE human resources, such as providing opportunities for people with disabilities, local communities, and female workers to hold strategic positions, including directors and commissioners.

According to Erick, SOEs are strategic state assets that play a crucial role in Indonesia's economic development. The transformation of SOEs through BPI Danantara is a strategic step toward realizing the vision of Advanced Indonesia by 2045, fostering synergy between the government, SOEs, and all stakeholders.

Toto Pranoto, an economics expert at the University of Indonesia, believes that the development of BPI Danantara is a reasonable step toward improving the efficiency impro of state asset management and promoting investment in Indonesia.

Muliaman Hadad, former Deputy Governor of Indonesia's central bank and Chairman of the Financial Services Authority's Board of Commissioners, was appointed to lead BPI Danantara, Xinhua news agency reported.

"The collaboration that has been going on will be a strong foundation for BPI Danantara to work effectively in providing a positive impact on the welfare of the Indonesian people," said Muliaman.

Piter Abdullah, executive director of the Segara Institute, assessed that BPI Danantara is a strategic step that will raise the productivity of public assets and boost the national economy's competitiveness. "With BPI Danantara, we can see that state investment is managed more strategically and measurably," said Piter.

He also emphasised that the BPI Danantara model aligns with global best practices and has the potential to attract further investment to Indonesia.

Nailul Huda, an economist from the Centre of Economic and Law Studies, believes that BPI Danantara, with its access to substantial SOE assets and legal certainty, will be able to handle investments across a variety of sectors.

However, challenges remain. He noted that Indonesia requires significant investment, particularly from foreign sources. The global economy's instability has made investors more cautious.

"Another challenge is the global economic instability, which causes investors to be more cautious when investing their wealth," Nailul told Xinhua.

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