Foto: Ray Jordan/detikcom
The seats of directors and commissioners in state-owned enterprises (BUMN) have become hotter. They must be prepared to be removed, especially those whose terms are ending and whose performance is poor. Even those with good performance and proven quality have been ousted. This is because the newly elected president, Prabowo Subianto, and Gibran Rakabuming Raka, are busy finding positions for the people who helped them win the presidential election (Pilpres) held on February. In addition to positions in ministries, the management seats in BUMN are important positions eyed by Prabowo-Gibran’s supporters.
Although the inauguration will only take place in October, Prabowo has already held power de facto. President Joko Widodo (Jokowi) has had to share power. Towards the end of his term, Jokowi reshuffled the cabinet to give positions to people in Prabowo’s circle at the end of August. Rosan Roeslani, the former Chairman of the National Campaign Team (TKN) for Prabowo-Gibran, was given the position of Minister of Investment and Head of the Investment Coordinating Board, replacing Bahlil Lahadalia, who was moved to become Minister of Energy and Mineral Resources.
A series of elites from the Gerindra Party and TKN members have already been appointed to positions
The reshuffling of BUMN management positions has already begun, with a long list of Prabowo-Gibran’s campaign team members waiting for their seats. As of early August 2024, 20 BUMN had already changed directors and commissioners. For instance, at Perusahaan Listrik Negara (PLN), Burhanuddin Abdullah, Chairman of the TKN Expert Council, was placed as President Commissioner, replacing Agus Martowardojo, a fellow former Governor of Bank Indonesia (BI) with an impeccable reputation. In Pertamina’s board of commissioners, Prabowo has appointed Simon Aloysius Mantiri and Tjondro Kirono, both of whom are key figures in the TKN (National Campaign Team). Other BUMN (State-Owned Enterprises) that have already undergone changes in their directors and commissioners include Timah, MIND.ID, Hutama Karya, Perhutani, Indofarma, and Kimia Farma.
The wave of BUMN management changes will continue, and it is common for BUMN to become a place for rewarding those who have served the ruling power. It’s no wonder that BUMN’s performance is mediocre. After recording a record high profit of IDR 348.74 trillion in 2022, it dropped again to IDR 313.59 trillion in 2023. More distressingly, BUMN continues to rely on state finances through state capital injections (PMN).
According to data from the Ministry of Finance, during the period 2019 to 2023, or during the time when the Ministry of BUMN was led by Erick Thohir, the total PMN disbursed by the state reached IDR 263.79 trillion. Meanwhile, the dividends received from BUMN during that period amounted to IDR 248.39 trillion. This means in total, based on PMN expenditure and dividend receipts in previous five years, the state actually lost Rp 15.4 trillion.
If we calculate over the 10 years from 2014 to 2023, the total PMN injected into BUMN reached IDR 401.37 trillion. Meanwhile, the cumulative dividends received by the state from BUMN amounted to IDR 452.43 trillion. After deducting the PMN, during the 10 years of Joko Widodo’s administration, the state only received a net dividend of IDR 51.06 trillion. This is the net dividend contribution from 157 BUMN companies, whose finances have been mired in “political mud” for 10 years.
Compare this with a single private company like Bank Central Asia (BCA) owned by the Djarum Group. In the same period, from 2014 to 2023, BCA’s cumulative profit amounted to IDR 280.92 trillion. Meanwhile, the dividends distributed by BCA over those 10 years totaled IDR 129.94 trillion. With a 55% ownership share in BCA, Djarum received a dividend portion of IDR 71.46 trillion, which is more than the net dividend received by the state from 159 BUMN companies.
Additionally, BCA is more attractive to investors. This is evident from BCA’s market capitalization, which reached IDR 1,211.27 trillion, or 84.98% of its assets, which stood at IDR 1,425.41 trillion (consolidated) as of June 2024. Compare this with Bank Mandiri, the largest state-owned bank, with assets of IDR 2,257.80 trillion and a market capitalization of only IDR 568.26 trillion. Similarly, Bank Rakyat Indonesia (BRI) has a market capitalization of IDR 690.19 trillion, even though BRI’s profit as of June 2024 was IDR 29.89 trillion, far surpassing BCA’s profit of IDR 26.88 trillion.
This means that the value of the firm of BCA is higher than that of Bank Mandiri or BRI. If an investor wanted to acquire 100% ownership of BCA shares, they would have to pay the full value of its market capitalization, which is IDR 1,211.27 trillion. Meanwhile, to acquire 100% ownership of BRI or Bank Mandiri, they would each have to pay IDR 700.70 trillion and IDR 568.26 trillion, respectively.
Even so, the state-owned banks—Bank Mandiri, BRI, Bank Negara Indonesia, and Bank Tabungan Negara (BTN)—set a good example of good corporate governance (GCG) practices and profitability within the BUMN environment. Four banks contributed 39.27% of all BUMN dividends over the last 10 years. From this year, BRI is the largest dividend contributor, at IDR 23.23 trillion, followed by Pertamina at IDR 14.02 trillion and Bank Mandiri at IDR 12.85 trillion.
Unfortunately, not all BUMN companies posted profits or contributed dividends to the state. Some are barely surviving, are even saddled with debt, and are unable to pay their obligations without state assistance. According to The Asiapost Research in its Rating of 157 BUMN 2024, there are 39 loss-making state-owned companies, including three under the Ministry of Finance. Moreover, a number of BUMN companies have not shown profitability for years, with some even declared bankrupt since 2022, such as Pengembangan Armada Niaga Nasional (PANN), Merpati Nusantara Airlines, Kertas Leces, Kertas Kraft Aceh, Industri Gelas, Industri Sandang Nusantara, and Istaka Karya. Even DOK Koja Bahari, which has been incurring losses since 2015, accumulated losses of IDR 1.22 trillion by 2023, leaving its fate uncertain.
What’s even more disheartening is that some publicly listed BUMN (State-Owned Enterprises), where a portion of their shares are owned by the public, have severely underperformed financially. Ideally, the public should benefit from the investments made in these BUMN companies, which are supposed to be productive state assets. Unfortunately, several publicly listed BUMN companies have failed to generate profits and are even unable to pay their mounting debts.
According to The Asian Post Research, there are several reasons for the losses at BUMN companies. First, mismanagement and a lack of a clear strategy have left companies unable to compete in the market.
Second, these companies have pursued expansion without being backed by good corporate governance (GCG) and adequate risk management, leading to sudden large losses due to competition or economic cycles. Moreover, revenue and profit growth have become key performance indicators for company directors.
Third, they have carried out government assignments to undertake projects that are not commercially feasible, relying on commercial loans and compounded by poor financial management. This includes BUMN construction companies, such as Pengembangan Pariwisata Indonesia.
These three causes become particularly pronounced when the government excessively intervenes politically and bureaucratically in BUMN, positioning them as agents of development. For shareholders, political interests often outweigh economic interests, and BUMN companies are continually pushed to achieve political objectives.
For example, President Jokowi, during his campaign, promised to achieve 7% economic growth. To fulfill this promise, Jokowi mobilized BUMN to support infrastructure development, in addition to disbursing funds through the state budget (APBN), totaling IDR 3,582.1 trillion from 2015 to 2024. The government’s debt rose from IDR 2,608 trillion during the first five years of Jokowi’s administration to IDR 4,514 trillion in 2019, and further to IDR 8,041.01 trillion in 2023. Similarly, BUMN liabilities increased from IDR 3,828.56 trillion in 2015 to IDR 6,215.20 trillion and further to IDR 8,278.09 trillion in 2023.
However, this October, Jokowi will leave office with unmet “promises of debt” as the average annual economic growth during his 10 years in power has only been 4.11%. His slogan of conducting a mental revolution also did not yield results. The bureaucratic and business ecosystem has become even more corrupt. The Corruption Eradication Commission (KPK) recorded 1,512 corruption crimes between 2014 and 2023, with the highest number of cases being 601 in regency/municipal governments, 474 in ministries/agencies, 196 in provincial governments, 143 in BUMN and BUMD (Regional-Owned Enterprises), and 76 in the DPR (House of Representatives). The most recent case involves corruption in the tin mining industry worth IDR 271 trillion, with the Attorney General’s Office naming 22 suspects.
Meanwhile, BUMN, overwhelmed by political and bureaucratic intervention, makes it difficult for their leaders to work independently and focus on results. They are tied to bureaucratic demands, and key performance indicators (KPI) are no longer solely based on financial performance but also on political relationships. For example, Sigit Winarto, who led Istaka Karya from 2017 to 2022, was considered a failure because Istaka Karya went bankrupt under his leadership, yet he was given a position in another state owned company, Jakarta Industrial Estate Pulogadung.
So, where will Prabowo Subianto take BUMN? Rumors suggest that Rosan Roeslani will be appointed as the Minister of BUMN, replacing Erick Thohir. However, the future of BUMN will largely depend on the president’s wishes, as the strategy will be carried out by the Minister of BUMN.
If Prabowo’s approach to managing BUMN (State-Owned Enterprises) mirrors Jokowi’s, the role of BUMN as agents of development will continue to be prominent. As agents of development, BUMN will be heavily influenced by interventions, particularly in the appointment of directors, commissioners, and even vendors. The criteria will no longer be based on competence and integrity to meet business needs and market dynamics. Moreover, many BUMN officials enter through political and power channels. Consequently, whenever a new regime comes into power and there is a new inner circle, a reshuffling of directors and commissioners occurs. As is happening now, there is anxiety among BUMN directors and commissioners. A new president, a new Minister of BUMN—who among the BUMN leaders will be replaced?
Although the inauguration will only take place in October, Prabowo has already held power de facto. President Joko Widodo (Jokowi) has had to share power. Towards the end of his term, Jokowi reshuffled the cabinet to give positions to people in Prabowo’s circle at the end of August. Rosan Roeslani, the former Chairman of the National Campaign Team (TKN) for Prabowo-Gibran, was given the position of Minister of Investment and Head of the Investment Coordinating Board, replacing Bahlil Lahadalia, who was moved to become Minister of Energy and Mineral Resources.
