Indonesia Closes Underperforming State-Owned Enterprises
· news
Indonesia to Close More Than 750 State-Owned Enterprises as Part of Radical Overhaul
Indonesia’s President Prabowo Subianto has announced plans to close more than 750 underperforming state-owned enterprises by the end of 2026, a move aimed at eliminating waste and inefficiency in the public sector. This overhaul is part of a broader effort to address long-standing issues of corruption and mismanagement within these companies.
The country’s struggle with governance and accountability has been well-documented. Indonesia ranked 34 out of 100 on Transparency International’s Corruption Perceptions Index in 2025, highlighting the need for systemic change. President Prabowo’s proposals include establishing a special court to investigate management and boards, as well as creating a new commodity exchange to set domestic prices.
The success of these reforms is not guaranteed, however. The Danantara sovereign wealth fund, established in 2025, has shown promising results, saving S$3.59 billion in costs and increasing profits by 75%. But whether this is a one-time anomaly or a sign of broader systemic changes remains to be seen.
One area where President Prabowo’s plans may face significant challenges is the implementation of a special amnesty for those who “repent” past corruption. This move has been met with skepticism, as many see it as an attempt to whitewash rather than hold individuals accountable. If left unaddressed, this risk could undermine the entire reform effort.
The creation of a new mineral and commodities exchange also raises important questions about Indonesia’s economic sovereignty. By setting its own prices for key commodities, the country is seeking to reduce its dependence on foreign exchanges. However, this may create unintended consequences, such as disrupting global markets or encouraging corruption.
President Prabowo has acknowledged that addressing decades of corruption and mismanagement will not be easy. The real test of his reform agenda will be whether he can deliver on promises to improve governance and accountability, rather than just cutting red tape or making cosmetic changes.
At stake is not only the future of Indonesia’s economy but also its reputation as a responsible steward of natural resources. As countries around the world grapple with climate change and sustainable development, Indonesia is being called upon to demonstrate its commitment to transparency and good governance.
President Prabowo’s reform agenda is both necessary and timely, but it demands more than just rhetoric or short-term fixes. It requires sustained effort to build institutions, promote accountability, and empower citizens to participate in the decision-making process.
The coming months will be crucial in determining whether Indonesia can successfully navigate this complex landscape. If President Prabowo fails to deliver on his promises, the consequences for the country’s economy and reputation could be far-reaching indeed.
Reader Views
- EKEditor K. Wells · editor
The move to close underperforming state-owned enterprises is long overdue for Indonesia, but let's not forget that these companies often employ thousands of workers and have far-reaching supply chains. Any reforms must prioritize the welfare of these affected communities, lest we trade one set of problems (inefficiency) for another (massive job losses). President Prabowo's plans also gloss over the elephant in the room: Indonesia's notoriously opaque business networks will likely continue to thrive unless genuine transparency and accountability measures are put in place.
- RJReporter J. Avery · staff reporter
This overhaul is long overdue, but the devil will be in the details of implementation. For all the talk of closing underperforming state-owned enterprises and establishing a special court to investigate corruption, President Prabowo's team needs to demonstrate a clear plan for integrating these companies' assets into more efficient institutions, rather than simply axing them. Moreover, the proposed amnesty program raises serious questions about accountability - will it truly hold corrupt officials accountable or merely shield them from consequences?
- CMColumnist M. Reid · opinion columnist
While President Prabowo's plan to close underperforming state-owned enterprises is a step in the right direction, it's crucial to consider the potential impact on Indonesia's employment market and local economic ecosystems. Many of these SOEs are not just financial drains but also provide essential services and support for rural communities. A hasty shutdown could lead to significant social and economic disruption, outweighing any potential benefits from cost savings or efficiency gains. The government should prioritize gradual consolidation and reorientation strategies to mitigate these risks and ensure a smoother transition.