Indonesia has marked a historic milestone in its corporate landscape after President Prabowo Subianto officially opened the door for foreign nationals to hold top positions in state-owned enterprises (SOEs).
The policy is expected to strengthen investor confidence and accelerate the adoption of international management standards within state-run companies, which have long struggled with challenges in efficiency and governance.
The announcement was made by President Prabowo himself on October 15, during the Forbes Global CEO Conference in Jakarta. In his statement, he declared, “I have changed the regulations. Expatriates and non-Indonesians can now lead our SOEs.”
This marks the first time in Indonesia’s modern history that a head of state has allowed foreign professionals to lead state-owned enterprises.
The regulatory change stems from an amendment to the SOE Law, which was passed by parliament on October 2. Under the new framework, the newly established State-Owned Enterprises Management Agency (BP BUMN) replaces the Ministry of SOEs as the main regulatory body.
Although Article 15 of the law still stipulates that board members must be Indonesian citizens, BP BUMN now has the authority to waive this requirement when deemed necessary for strategic purposes.
Danantara Takes the Lead in Implementation
The new policy was quickly followed by concrete action from Indonesia’s sovereign wealth fund, Danantara, which now oversees more than 1,000 SOEs and their subsidiaries.
On the same day, Garuda Indonesia announced the appointment of two foreign nationals to its board of directors: Balagopal Kunduvara, former senior executive at Singapore Airlines, as Chief Financial Officer, and Neil Raymond Mills, an aviation professional from South Africa, as Director of Transformation.
The decision was confirmed by Rosan Roeslani, CEO of Danantara, who explained that Garuda—the nation’s flag carrier, which has posted losses for three consecutive years—requires experienced leadership to restore profitability. He emphasized that the new management team is expected to execute the airline’s restructuring plan swiftly and effectively.
According to Channel News Asia, Rosan revealed that Garuda has received a US$405 million shareholder loan from Danantara, with the fund committed to providing up to US$1.8 billion to strengthen the airline’s financial position.
As of the first half of 2025, Garuda reported a US$142.8 million loss, with total debt reaching US$737 million, exceeding its total assets, valued at US$581 million.
Focus on Professionalism and Top Talent
According to the Jakarta Globe, Pandu Sjahrir, Chief Investment Officer of Danantara, emphasized that hiring foreign professionals will be a last resort, only if the best talents from within Indonesia or the Indonesian diaspora are unable to meet competency requirements.
“There is a wish to turn our SOEs into global champions… this is a dream that requires human capital. But our priorities remain the same: we will look for the best talents at home, as well as the Indonesian diaspora,” he said.
At the same forum, President Prabowo instructed all SOEs under Danantara to reach “international standards” in governance and performance. He added, “You [Danantara] can look for the best brains and best talents. I have changed the regulations.”
SOE Restructuring
In addition to opening leadership roles to foreign professionals, President Prabowo also aims to streamline Indonesia’s SOE structure, which he views as excessively large and inefficient.
Of the more than 1,000 companies currently managed by Danantara, he plans to reduce the number to between 230 and 240 entities, leaner, more rational, and globally competitive.
According to Danantara’s internal reports, over half of Indonesia’s SOEs are currently operating at a loss. The agency is therefore reviewing merger and liquidation plans for several overlapping or non-viable companies.
However, a few strategic entities, including Garuda Indonesia, Indofarma, and Krakatau Steel, are expected to be preserved through major restructuring efforts.
Government Reaffirms Commitment to Local Professionals
In response to public concern that the policy might sideline local professionals, State Secretary Prasetyo Hadi stressed that the government’s decision is aimed solely at accelerating knowledge transfer and implementing global management systems within SOEs, as reported by Antara.
During a ministerial meeting in Jakarta on October 17, Hadi emphasized that openness to foreign professionals does not diminish the capabilities of Indonesians. Hadi offered a simple analogy, comparing this policy to the world of sports.
“If we have a good local coach, we use them. But if we need a foreign coach, that’s fine too.”
Hadi also noted that the recruitment of foreign executives has been incorporated into the newly revised internal regulations of SOEs, ensuring the policy is backed by a strong legal foundation and fully integrated into the state corporate governance framework.
