Jakarta. President Prabowo Subianto wants to shrink Indonesia's vast state-owned enterprise sector to about 250 companies within the next two years, saying the consolidation is aimed at eliminating inefficiencies while avoiding mass layoffs.

Speaking at the closing ceremony of the National Symposium of the Indonesian Science, Technology and Industry Convention (KSTI) on Sunday, Prabowo said the government had already begun streamlining the sector, which once comprised more than 1,000 state-owned companies and subsidiaries.

"Out of more than 1,000 SOEs, we have already closed more than 200. Eventually, we will reduce the number to around 300," Prabowo said before asking Danantara Chief Operating Officer and State-Owned Enterprise Management Agency (BP BUMN) head Dony Oskaria about the government's final target.

"How many SOEs can we eventually have, Dony?" Prabowo asked.

"Eventually, around 250, Sir," Dony replied.

Prabowo said the restructuring was necessary to eliminate inefficient state companies that consume public funds without generating profits.

"Imagine, more than 750 companies will be closed. This is all public money. These companies are not making profits; they only pay for overhead," he said.

He added that the transformation would strengthen SOE governance and improve the sector's contribution to the economy, with the consolidation targeted for completion within two years.

Dony assured employees that the restructuring would not result in job cuts, as workers from dissolved entities would be absorbed into the consolidated companies.

"The President certainly does not want layoffs," Dony said.

Danantara is currently streamlining around 1,077 SOEs into approximately 200 to 300 companies, with the process expected to be completed in 2026.

According to Dony, around 52% of SOEs are still loss-making, with combined losses reaching Rp 20 trillion ($1.2 billion), underscoring the need for consolidation to improve efficiency and financial performance.

He argued that labor costs account for only a small portion of the potential savings from the restructuring. "Our annual labor cost is only around Rp 2 trillion to Rp 3 trillion. I can simply keep all the employees and still save Rp 47 trillion," he said.

Dony reiterated that no employees would lose their jobs during the consolidation.

"None of our employees will be laid off. They will all become part of the consolidated companies. We do not want to treat employees unfairly because this is not their fault," he said.

The SOE consolidation program is projected to generate annual savings of around Rp 50 trillion by simplifying corporate structures and eliminating layered transactions among parent companies, subsidiaries, and lower-tier entities.

As an example, Dony said the merger of several subholdings within Pertamina had already produced efficiency gains of between $600 million and $700 million. The government plans to replicate the model across other SOE groups to build leaner, healthier, and more competitive state-owned companies.

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