New Law Grants Extensive Powers to Indonesia's SOE Minister Over SWF
JAKARTA, investortrust.id - The parliament has passed a new law, granting sweeping new powers to state-owned enterprises minister, particularly in the management of the newly established sovereign wealth fund, the Daya Anagata Nusantara Investment Management Agency, or Danantara.
On Tuesday, Feb 4, 2025, the House of Representatives passed the third amendment to to Law Number 19 of 2003 concerning State-Owned Enterprises (SOEs).
In his address to parliament, Minister of SOEs Erick Thohir stated that Danantara will manage SOEs, both operationally and in optimizing dividend management.
"One of the goals is to help the government achieve the 8% economic growth target," Erick said during the 12th Plenary Session of the DPR for the Second Session Period of 2024-2025, in the Plenary Session Room, Parliament Complex, Jakarta.
Erick explained that the establishment of BPI Danantara is a strategic step towards realizing the shared vision of a Developed Indonesia on the way to a Golden Indonesia 2045. In the future, the government, SOEs, and all stakeholders can build a strong and sustainable economic foundation for future generations.
According to Erick Thohir, with the official establishment of Danantara, the management of SOE assets will continue to follow the principles of accountable corporate governance and in accordance with laws and regulations.
Extensive Authority
Based on the Inventory of Issues List (DIM) of the Third Amendment to the Draft Law (RUU) Number 19 of 2003 concerning BUMN, which became the basis for the discussion and ratification of the BUMN Law, the Minister of SOEs has extra authority in managing Danantara.
One of the powerful authorities of the Minister of SOEs is to be the state's representative in managing the segregated state assets in SOEs. Under a unique Indonesian legal framework, segregated state assets are state-owned assets entrusted to SOEs for management under a separate legal regime, granting them a degree of autonomy from direct government control.
Article 3A paragraph 3 of the new law states that some of the duties and authorities of the Minister of SOEs will be delegated to Danantara. However, Article 3B point a states that the Minister of SOEs will determine the policy, regulation, guidance, coordination, and implementation of SOE management policies. In the next point in the same article, the Minister of SOEs also has the authority to determine the policy, regulation, and supervision of Danantara.
Article 3C paragraph 1 details 10 duties of the Minister of SOEs, namely determining the general policy direction of SOEs, determining SOE governance policies, regulating and assigning tasks to SOEs, regulating the procedures and main content of key performance indicators, approving the restructuring of SOEs, including mergers, consolidations, acquisitions and separations, establishing investment holdings, operational holdings, and SOEs.
Other duties include proposing privatization plans to the privatization committee, approving and consulting with the DPR on the work plans and budgets of investment holding companies and operational holding companies, inspecting investment holding companies, operational holding companies, and SOEs, as well as other authorities determined by the president.
Article 3D paragraph 1 states that the Minister of SOEs will delegate some of his duties and authorities to Danantara. However, paragraph 4 of the same article stipulates that the Minister of SOEs will be the supervisor and Danantara will report its duties to the president. Based on Article 3D paragraph 5 of the Law, to ensure dividend contributions for investment management, the Minister of SOEs may place representatives in BPI Danantara.
Duties and Authorities of the Minister of SOEs:
Determine the general policy direction of SOEs.
Determine SOE governance policies.
Regulate and assign tasks to SOEs.
Regulate the procedures and main content of key performance indicators for SOEs.
Approve the restructuring of SOEs, including mergers, consolidations, acquisitions, and separations.
Establish investment holdings, operational holdings, and SOEs.
Propose privatization plans to the BUMN Privatization Committee.
Approve and consult with the DPR on the work plans/budgets of investment/operational holdings.
Inspect investment holdings, operational holdings, and SOEs.
Other authorities determined by the president.
Meanwhile, the duties and authorities of Danantara include managing the dividends of investment holdings, operational holdings, and SOEs, as well as approving the addition and/or reduction of capital participation in SOEs sourced from dividend management. Danantara also has the authority to approve the restructuring of SOEs, including mergers, consolidations, acquisitions, and separations, as well as to establish investment holdings, operational holdings, and SOEs.
Other duties and authorities include approving the proposed write-off and/or write-off of receivables on SOE assets proposed by investment holdings or operational holdings, as well as approving and consulting with the DPR on the work plans and budgets of investment holding companies and operational holding companies.
Duties and Authorities of BPI Danantara:
Manage the dividends of investment holdings, operational holdings, and SOEs.
Approve the addition and/or reduction of capital participation in SOEs sourced from dividend management.
Approve the restructuring of SOEs, including mergers, consolidations, acquisitions, and separations.
Establish investment holdings, operational holdings, and SOEs.
Approve the proposed write-off and/or write-off of receivables on SOE assets proposed by investment holdings or operational holdings.
Approve and consult with the DPR on the work plans/budgets of investment/operational holding companies.