Jakarta. The Indonesian government is moving forward with a sweeping overhaul of its state-owned enterprises, a reform that investors say could reshape about $180 billion in value, or roughly one-fifth of the Jakarta Stock Exchange’s market capitalization.

Lawmakers on Friday approved revisions to the SOEs Law that dissolve the State-Owned Enterprises Ministry and transfer control of government holdings to the sovereign wealth fund Danantara and a newly created regulator BPBUMN. The restructuring aims to streamline governance and curb political interference, but analysts warn the impact on SOE-listed stocks will hinge on how the rules are enforced.

SOEs such as Bank Rakyat Indonesia, Bank Mandiri, Telkom Indonesia, and Perusahaan Gas Negara account for almost 20 percent of the IDX by market value, making the reform one of the most important policy shifts for the capital market in recent times.

Head of Research at Kiwoom Sekuritas, Liza Camelia Suryanata, said the SOEs Law revision, which covers 84 articles, is aimed at strengthening transparency and accountability. For publicly listed SOEs, the regulation could clarify the roles of directors, commissioners, and shareholders, thereby improving legal certainty and investor protection.

“If its implementation is consistent, the performance of public companies could improve because their business practices will be more aligned with good corporate governance (GCG) principles, which are also the standard in capital markets,” Liza told Investor Daily on Monday.

According to her, investors tend to view positively any policy that enhances transparency. Clearer oversight mechanisms could reduce the risk of moral hazard and conflicts of interest, giving shareholders greater confidence that SOEs’ strategic decisions are oriented toward profitability and sustainability, rather than purely political interests. 

Under the new framework, the SOEs Ministry will be abolished. Its regulatory functions will be handed to the State-Owned Enterprises Regulatory Agency (BPBUMN), while Danantara will consolidate operational control and dividend policy. The government will retain a 1 percent “golden share” in each enterprise, giving it veto power over strategic moves such as mergers, acquisitions, and liquidation.

While market analysts see potential for stronger governance, critics warn of hidden risks. Herry Gunawan, director at NEXT Indonesia Center, said that despite the government’s aim of modernizing SOEs, the draft law paradoxically reopens oversight by the State Audit Agency (BPK). “This exposes SOE executives to possible corruption charges if business decisions result in losses,” Herry said. “It will make managers more risk-averse, especially for large corporate actions like acquisitions or IPOs.”

That concern matters for investors eyeing the long-delayed public offering of railway operator Kereta Api Indonesia (KAI), which could become one of the market’s biggest listings. Any hesitation in decision-making could stall such offerings, reducing opportunities to deepen IDX liquidity.

The revised law bars ministers and deputy ministers from serving on SOE boards but still allows lower-level bureaucrats to sit as commissioners, a loophole that Herry warned could perpetuate conflicts of interest. “Regulators should not simultaneously act as operators,” he said, adding that the creation of BPBUMN may end up expanding bureaucracy rather than streamlining it.

“SOEs are private entities. Oversight should be left to existing authorities such as the Financial Services Authority (OJK), Bank Indonesia, or the Finance Ministry. Establishing the BPBUMN only adds another layer of overlap,” he stressed.

Eko Listiyanto, director of big data development at INDEF, offered a more cautious view, suggesting the revisions may not automatically translate into market upside. 

“If it becomes too bureaucratic, it will be counterproductive because SOEs need flexibility," he said, adding that strengthening Danantara as the holding company managing SOEs should be sufficient without the need for an additional agency.