State No Longer Bears SOE Losses Upon Danantara's Establishment

February 21, 2025 | 06:56 pm

TEMPO.CO, Jakarta - The establishment of the Investment Management Agency Daya Anagata Nusantara (BPI Danantara) will alter the way State-Owned Enterprise (SOE) profits and losses are managed, effectively removing the burden from the state. This provision is stipulated in the revised State-Owned Enterprises or SOE Law approved by the House of Representatives (DPR) during a plenary session on Tuesday, February 4, 2025.

According to the revised SOE Law, Danantara's profits and losses are considered to be its own. This provision is written in Article 3H of the new legislation.

Executive Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira Adhinegara, interprets this provision as a sign that SOE dividend payments to the state are no longer a government's priority.

"So, Danantara prioritizes the safety of its internal finances and also its responsibility to investors or institutions that provide loans, rather than depositing excess profits to the state," Bhima said in a voice message on Friday, February 21, 2025.

Bhima expressed critical views regarding this regulation, given that Danantara may still need state capital participation in its operations. "So, the correlation between state capital participation and dividends paid may be inversely related," he said.

The following provisions regarding Danantara's profits and losses, as detailed in Article 3H of the SOE Law draft obtained by Tempo, are as follows:

(1) The agency can make investments, either directly or indirectly, and collaborate with Investment Holdings, Operational Holdings, and third parties.

(2) The profits or losses incurred by the agency in its investment activities, as referred to in point (1), are the agency's profits or losses.

(3) If the agency generates profits, as stated in point (2), part of the profits is determined as state income to be deposited into the state treasury after funds have been set aside to cover or mitigate investment losses and/or accumulate capital.

(4) Further regulations regarding the setting aside funds to cover or mitigate investment losses and/or accumulate capital, as mentioned in point (3), will be regulated in a Government Regulation.

In addition, Article 4B of the revised SOE Law addresses the profits or losses of SOEs themselves, stating that they are to be considered SOE profits or losses. The article's explanation clarifies that SOE profits and losses include, but are not limited to, those arising from the management of part or all SOE assets in investment and/or operational activities of the respective SOE.

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