Jakarta. Sovereign wealth fund Danantara Indonesia will accelerate the streamlining of state-owned enterprises (SOEs), an overhaul expected to generate Rp 70 trillion ($3.9 billion) in savings by the end of this year, Chief Operating Officer Dony Oskaria said on Wednesday.

Dony said 290 state-owned companies have already undergone the streamlining process, with around 300 more targeted for restructuring by year-end.

“The SOE transformation is progressing quite well. We have streamlined 290 companies, and going forward we expect to complete the process for around 300 more,” Dony said at the Investor Daily Policy and Economic Dialogue in Jakarta.

Dony, who also heads the State-Owned Enterprises Regulatory Agency, said the restructuring has delivered significant improvements in efficiency and cost reduction. The overhaul is also expected to improve the performance of state businesses and strengthen their role as a driver of the national economy.

Companies that have already been shut down had accumulated combined losses of around Rp 20 trillion annually, Dony said. Their closure will eliminate the burden of covering those losses.

Many of the shuttered companies also had business relationships with their respective parent companies that created an estimated Rp 30 trillion in inefficiencies. Combined with the elimination of annual losses, the measures are expected to generate around Rp 50 trillion in efficiencies.

Additional savings will come from eliminating salaries, remuneration for commissioners and directors, and other executive benefits associated with the affected companies, which Dony estimated at more than Rp 15 trillion.

“So, by the end of the year, we expect to save approximately Rp 70 trillion as a result of this streamlining,” Dony said.

World's Largest SOE Overhaul
President Prabowo Subianto on Aug. 14 unveiled an ambitious plan to reduce Indonesia’s more than 1,000 state-owned companies, subsidiaries, and lower-tier subsidiaries to no more than 300 by the end of this year, describing the overhaul as potentially the world’s largest corporate restructuring.

Addressing lawmakers at the annual session of the People’s Consultative Assembly (MPR), Prabowo said the restructuring was intended to ensure that state-owned businesses benefit the public rather than burden state finances through losses, bloated management structures, and generous executive perks.

“State-owned enterprises belong to all Indonesian people -- not to directors, not to commissioners, and certainly not as a source of funds for those in power,” Prabowo said.

He said Indonesia had 1,074 state-owned enterprises and their subsidiaries and lower-tier subsidiaries, arguing that many were unproductive and burdened by excessive layers of directors and commissioners.

“Today, I report to this honorable Assembly that we have closed 290 state-owned companies. By the end of this year, we aim to have no more than 300,” Prabowo said.

He added that more than 750 entities would ultimately be eliminated under the restructuring, leaving only productive businesses that generate added value.

“This may be the largest corporate restructuring in the world,” Prabowo said.

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