On February 24, 2025, the President of the Republic of Indonesia, Prabowo Subianto, enacted Law Number 1 of 2025, constituting the Third Amendment to Law Number 19 Year 2003 concerning State-Owned Enterprises/Badan Usaha Milik Negara (“BUMN”) (“Revised BUMN Law”). This substantive amendment marks a new chapter in the governance of BUMN within Indonesia. This includes the establishment of the Daya Anagata Nusantara Investment Management Authority (BPI Danantara), and which the organizational structure and governance framework has recently regulated on February 24, 2025 under Government Regulation No. 10.
This article will highlight some key points of change introduced by the Revised BUMN Law. These includes the establishment of : (i) Reconceptualizing the Meaning of BUMN Assets and State Assets; (ii) Role of Danantara and Presidential Oversight in BUMN; (iii) Investment Holding; and (iv) Operational Holding.
BUMN Assets and State Assets
The Revised State-Owned Enterprises Law has altered the definition of State-Owned Enterprises (BUMN), which was previously stipulated in Article 1, number 1 of Law No. 19 of 2003 concerning State-Owned Enterprises (“Law No. 19/2003“). The revisions are as follows:
Law No. 19/2003:
“A State-Owned Enterprise, hereinafter referred to as BUMN, is a business entity whose capital is wholly or partially owned by the state through direct participation, derived from separated state assets.”
Revised BUMN Law:
“A State-Owned Enterprise, hereinafter referred to as BUMN, is a business entity that fulfills at least one of the following criteria:
- its capital is wholly or partially owned by the Republic of Indonesia through direct participation; or
- the Republic of Indonesia possesses special privileges.”
This amendment removes the phrase “derived from separated state assets.” In general, in can be understood that the definition of BUMN is now broader. In addition to most or all of the capital being owned by the state, a business entity might also be categorized as an BUMN if the state has special rights in it.
Moreover, as stated in Article 4C Revised BUMN Law, the special privileges possessed by the Republic of Indonesia in the definition of BUMN means that the Republic of Indonesia owns series A Dwiwarna shares with special rights in Investment Holding, Operational Holding, and BUMN. The share ownership is obtained through the ministry that organizes government affairs in the field of BUMN.
Series A Dwiwarna shares with special rights have special rights at least as follows:
- the right to approve in the General Meeting Shareholder (“GMS”);
- the right to propose the agenda of the GMS;
- the right to request and access company data and documents in accordance with laws and regulations;
- the right to establish strategic guidelines/policies in the fields of:
- accounting and finance;
- development and investment
- operational and auditing of goods and/or services;
- information technology
- human resources
- risk management and internal control
- legal and compliance
- social and environmental responsibility program; and
- environmental, social, and governance (ESG) program.
- the right to appoint and dismiss the Board of Directors and Board of Commissioners with the approval of the President; and
- other rights stipulated in the articles of association.
However, further provisions regarding privileges are regulated in a Government Regulation.
The Role of Danantara and Presidential Oversight in BUMN
Seeking increased investment and global capital, the Government of Indonesia has launched a new sovereign wealth fund to manage key BUMN’s, with the purpose to maximize dividends and minimize political interference, named Danantara. As the President explained that ‘Daya‘ means energy or power, while ‘Anagata‘ refers to the future. Thus, the meaning of Danantara is the power for the Indonesia’s future.
The new framework redefines the roles of key players in BUMN governance. The Ministry of BUMN will focus on policymaking and supervisory functions, while Danantara assumes the role of an active operator and manager. To ensure checks and balances, Danantara will report directly to the President. Danantara’s governance structure comprises three distinct bodies: a Supervisory Board, a Managing Board, and an Advisory Board. The President holds the exclusive authority to appoint and dismiss members of these boards, as demonstrated by Presidential Decree No. 30 of 2025, which formalizes the appointments to the Supervisory and Managing Boards.
The Revised BUMN Law also introduces a crucial layer of protection for decision-makers through the adoption of the business judgment rule. This rule shields the Minister of BUMN, Danantara’s boards, and staff from legal repercussions for investment losses, provided they can demonstrate the following:
- The losses were incurred without fault or negligence on their part.
- They acted in good faith and with due diligence, aligning with investment objectives and governance principles.
- No direct or indirect conflicts of interest influenced their investment management decisions.
- No personal gain was unlawfully obtained.
Danantara’s investment strategy encompasses direct investments and collaborations with various entities:
- Investment Holdings: These entities specialize in strategic asset management and maximizing investment value.
- Operational Holdings: Tasked with overseeing the operations of BUMN to enhance efficiency and productivity.
- Third-Party Collaborations: Danantara will also partner with external entities to leverage expertise and expand investment opportunities.
To ensure a structured and efficient management of state assets, the Ministry of BUMN and Danantara will jointly establish Investment Holdings and Operational Holdings. These holdings will operate under Danantara’s guidance, aligning their strategies with the agency’s overarching economic objectives. Each holding will be structured as a limited liability company, possessing its own board of directors and commissioners to ensure effective governance. The Investment Holdings and Operational Holdings, in which 99% of series B shares are owned by Danantara and 1% of series A Dwiwarma is owned by the State, is tasked with managing the investment and operations of BUMN, with flexible establishment through the creation of new BUMN or the appointment of existing BUMN.
Investment Holding
The Investment Holding is BUMN in a form of a legal entity structured as a limited liability company, with all shares held by the Republic of Indonesia and Danantara. The shareholding composition is as follows:
| Ownership | Share Classification | Share Percentage |
| Republic of Indonesia *with Special Rights and Privileges through Ministry of BUMN | Series A Dwiwarma | 1% |
| Danantara | Series B | 99% |
In carrying out their duties, the Investment Holding is authorized to undertake the following actions:
- Formulate and propose the work plan and corporate budget of the Investment Holding;
- Manage the dividends of BUMNs;
- Conduct asset empowerment activities;
- Issue debt instruments and/or receive loans;
- Provide loans and/or guarantees to Operational Holdings, BUMNs, or BUMN Subsidiaries;
- Perform management and administration of the Investment Holding’s assets;
- Propose the write-off of assets or the write-off of receivables of the Investment Holding to the Agency;
- Propose management contracts to the Agency for approval; and
- Undertake other actions as determined by the Minister or the Agency, or as stipulated in the articles of association of the Investment Holding.
The Board of Directors in Investment Holding consists of 1 (one) managing director and 1 (one) or more members of the Board of Directors. In the event that the Board of Directors of Investment Holding consists of 2 (two) or more members, the division of duties and management authority among the members of the Board of Directors shall be determined based on the decision of the GMS of Investment Holding. In exercising its authority in its management, the Board of Directors of Investment Holding is responsible for the implementation of the duties of Investment Holding as stipulated in the laws and regulations regarding Investment Holding and the articles of association of Investment Holding. However, regarding the requirements of the Investment Holding Board of Directors and the prohibition of the Investment Holding Board of Directors are further regulated in a Ministerial Regulation.
The Board of Commissioners of the Investment Holding shall consist of: one (1) Principal Commissioner, one (1) Commissioner, and one (1) Independent Commissioner. The principal commissioner of the Investment Holding is a representative of the ministry of BUMN. The aforementioned representative from the Ministry of BUMN must hold a minimum position of Echelon I level.
It is important to note that the Revised BUMN Law introduces significant changes to the appointment and dismissal of Directors and Commissioners in BUMN. Previously, under Government Regulation No. 72/2016 (which amended Government Regulation No. 44/2005), the special rights of the government in BUMN only included the right to appoint members of the Board of Directors and Board of Commissioners. However, the Revised BUMN Law expands these privileges. Holders of Series A Dwiwarna shares (representing the government) now have the right to both appoint and dismiss Directors and Commissioners. Furthermore, these actions (both appointment and dismissal) now require the President’s approval.
As of the time of this article, the implementing regulation in the form of a government regulation has not yet been finalized, whereby further provisions regarding privileges will be regulated in a government regulation. However, as of the date of this article, the implementing regulation in the form of a government regulation that will further regulate the privilege has not yet been issued.
Operational Holdings
Your Attractive Heading
Similar to Investment Holdings, as elucidated in the explanation of Article 3AK of the Revised BUMN Law, Operational Holdings may be established by either forming new BUMNs or designating an existing BUMN to serve as an Operational Holding. Operational Holdings have the mandate to: (a) manage BUMN operational activities; and (b) carry out other tasks directed by the Minister of BUMN or Danantara.
The Operational Holding is authorized to undertake the following actions:
- Formulate and propose the Operational Holding’s work plan and corporate budget;
- Issue debt instruments and/or obtain loans;
- Provide loans and/or guarantees to BUMNs or BUMN Subsidiaries;
- Manage and administer the assets of the Operational Holding, BUMNs, and BUMN Subsidiaries;
- Propose the write-off of assets and/or receivables of the Operational Holding and/or BUMNs to Danantara;
- Propose Operational Holding management contracts to Danantara for approval; and
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The establishment of Danantara mark a significant shift in the governance and management of state-owned enterprises. Key changes include a broader definition of state owned enterprises, the establishment of Danantara (a new sovereign wealth fund), and the introduction of Investment Holdings and Operational Holdings. It should also be noted that further provisions regarding privileges will be regulated in a Government Regulation that is currently being drafted. These reforms aim to optimize BUMN performance, attract investment, and enhance efficiency. The Ministry of BUMN retains policymaking and supervisory functions, while Danantara assumes an active role in managing BUMN and state assets. The success of these changes will depend on effective implementation, robust governance, and maintaining transparency and accountability.
Author: Ichsan P. Kurniagung & Feira S.
