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Prabowo Subianto to Slash 750 State Enterprises in Indonesia Restructuring

The argument

Indonesia's government, under President Prabowo Subianto, is undertaking a significant restructuring of its state-owned enterprise sector, aiming to reduce the number of entities by over 750 by the close of 2026 to enhance efficiency and asset management.

By Lena Ho21 August 20263 min read
Photo: Irgi Nur Fadil / Pexels

The Scope of Indonesia's State Enterprise Reform

Indonesia's government is implementing a substantial reform of its state-owned enterprise (SOE) sector, targeting the closure of more than 750 entities by the end of 2026.

President Prabowo Subianto announced this initiative on Friday, 14 August 2026, emphasising the need to address widespread inefficiency and alleged misreporting of financial performance within these organisations. The objective is to streamline state assets, ensuring that only productive entities that contribute tangible value to the nation remain operational.

This effort follows a detailed assessment that revealed a significantly larger number of SOEs than previously understood, underscoring the scale of the challenge in optimising state-controlled economic activity. The reform seeks to redirect resources and improve governance across a critical segment of the Indonesian economy.

Uncovering the Scale of the Challenge

The impetus for this extensive restructuring emerged from findings by Indonesia's Danantara sovereign wealth fund, established in 2025. Investigations conducted by the fund revealed the existence of 1,074 state-owned enterprises, a figure considerably higher than the 300 to 400 entities President Subianto had initially estimated.

This discrepancy demonstrated a lack of comprehensive oversight and accountability across the sector. President Subianto noted in his address on 14 August 2026 that many of these organisations operated without adequate responsibility to the state, often reporting notional profits while, in reality, incurring losses.

This situation necessitated a direct intervention to prevent further drain on state resources and to ensure that public assets are managed with greater transparency and effectiveness.

Implementation and Financial Impact

The government has already initiated closures, with 290 state-owned enterprises ceasing operations since the reform began. The target is to reduce the total count to no more than 300 by 31 December 2026, implying the closure of over 750 additional entities within the current year. This consolidation drive has already yielded financial benefits.

President Subianto reported that overhead costs, including compensation for directors and commissioners, building and vehicle rentals, and business travel expenses, have seen reductions totalling approximately 50 trillion rupiah (equivalent to over US$2.8 billion).

The government's financial target for 2026 is to achieve further cost reductions exceeding 70 trillion rupiah, demonstrating a clear commitment to fiscal discipline and resource optimisation.

Enhancing Accountability and Governance

To reinforce accountability, President Subianto has indicated the potential establishment of a special ad hoc court. This court would be tasked with investigating the management and boards of state-owned enterprises, potentially examining records spanning the past three decades.

This measure aims to address historical mismanagement and ensure that those responsible for unproductive operations are held to account. Concurrently, the President also proposed considering a "special amnesty" for individuals who demonstrate genuine repentance for past transgressions.

This dual approach seeks to balance strict enforcement with an opportunity for reconciliation, ultimately intending to foster a culture of integrity and responsible stewardship within the state enterprise sector.

Economic Consequences and Outlook

The consolidation of Indonesia's state-owned enterprises carries direct implications for the nation's economic efficiency and public finances. By reducing the number of entities to 300 by 31 December 2026, the government anticipates a more focused allocation of capital and operational resources.

The projected cost savings of over 70 trillion rupiah for 2026, following the initial 50 trillion rupiah in reductions, will directly alleviate pressure on the national budget. For investors and businesses in Asia, this reform shows Indonesia's commitment to improving its investment climate through enhanced governance and reduced state-sector drag.

The effectiveness of this programme will be measurable by the end of 2026, specifically through the final reported number of operational SOEs and the confirmed cost savings for the year, as detailed by the Ministry of Finance or equivalent body.

This analysis is journalism, not investment advice; consult a licensed professional before making financial decisions.

Pieces are credited to the desk that commissioned and edited them. Our editorial standards, and the desks behind them, are set out on the Editorial Standards and Team pages.

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