12 Aug 2026
Indonesia's New SOE Rulebook: How the Draft Regulation Could Reshape SOE Transactions

Indonesia's state-owned enterprise (SOE) sector is entering a new phase of reform. Following the enactment of Law No. 16 of 2025, which restructured SOE governance and established the SOE Regulatory Body (BP BUMN) and Daya Anagata Nusantara Investment Management Agency (Danantara), the Government has issued a Draft Government Regulation on the Restructuring and Privatization of SOEs (the Draft Regulation). 

Once enacted, it will replace the two existing government regulations governing SOE privatization and corporate restructuring, namely (i) Government Regulation No. 33 of 2005 on the Procedures for the Privatization of Persero, as amended by Government Regulation No. 59 of 2009 ("GR 33/2005"); and (ii) Government Regulation No. 43 of 2005 on the Merger, Consolidation, Acquisition, and Change of Legal Form of SOEs ("GR 43/2005"). Although presented as an implementing regulation, the Draft Regulation does more than merely update existing procedures. It introduces a new governance framework for SOE restructuring and privatization, clarifies the respective roles of Danantara and BP BUMN, and establishes a broader range of restructuring mechanisms. 

Restructuring Is No Longer Just About Corporate Actions

One of the most significant changes is the broader concept of "restructuring."

Under the existing framework, mergers, acquisitions and spin-offs are regulated as separate corporate actions, each with its own procedural requirements. The Draft Regulation adopts a different approach by treating restructuring as an umbrella concept that encompasses legal actions aimed at improving performance, enhancing enterprise value, rehabilitating or rescuing an SOE. It distinguishes between:

• Performance or value-driven restructuring, aimed at improving efficiency or increasing enterprise value; and 

• Rehabilitation or rescue, for financially distressed SOEs. 

This distinction is more than a matter of classification. It determines the applicable approval process, the authorities involved and, ultimately, the level of government oversight.

More importantly, it reflects a shift in how SOE transactions are viewed. Rather than focusing solely on the legal form of the transaction, for example, whether it is structured as a merger or a share transfer, the Draft Regulation places greater emphasis on the underlying objective of the restructuring. 

Danantara Takes a Larger Role

The Draft Regulation also provides the first detailed implementation of the governance framework introduced under the amended SOE Law by allocating responsibilities between Danantara and BP BUMN.

For restructurings intended to improve performance or enterprise value, proposals are generally prepared by the board of directors and submitted to Danantara for approval. By contrast, restructurings undertaken as rehabilitation or rescue measures fall under the supervision of BP BUMN and, where relevant, a newly established Rescue Committee (Komite Penyelamatan), a body tasked with formulating rescue-related policies, coordinating decision-making among relevant ministries and agencies, and resolving strategic issues that arise during the rescue process, with its chair reporting periodically to the President.

This allocation of responsibilities reinforces the separation between Danantara's role as the State's investment manager and BP BUMN's role as regulator. In practice, Danantara is expected to play a significantly more active role in evaluating and coordinating commercial restructuring initiatives across the SOE portfolio, while BP BUMN focuses on restructurings that involve broader public policy considerations.

A New Framework for Distressed SOEs

For the first time, the Draft Regulation clearly distinguishes between rehabilitation (penyehatan) and rescue (penyelamatan).

Rehabilitation applies to SOEs that remain commercially viable and can reasonably be restored to financial health. Rescue, meanwhile, is intended for SOEs whose failure could affect essential public services or have broader socio-economic consequences. Both rehabilitation and rescue are determined based on qualitative criteria supported by a study (kajian) prepared by the SOE itself. The head of BP BUMN determines rehabilitation, while the Rescue Committee determines rescue. Where neither approach is appropriate, the Draft Regulation also contemplates dissolution of the SOE, with the actual process to follow the dissolution procedure under the Company Law. 

Rehabilitation applies to SOEs that are still commercially viable and can realistically be restored to financial health. Rescue applies to SOEs whose failure could disrupt essential public services or cause broader socio-economic harm. Both rehabilitation and rescue are determined based on qualitative criteria supported by a study (kajian) prepared by the SOE itself. The head of BP BUMN determines rehabilitation, while the Rescue Committee determines rescue. If an SOE meets neither set of criteria, the Draft Regulation provides for its dissolution, with the actual process to follow the general rules under the Company Law.

Although further implementing regulations are expected, the Draft Regulation introduces a more structured approach for dealing with financially distressed SOEs than under the current framework.

More Options for SOE Restructuring

The Draft Regulation also expands the range of restructuring mechanisms available to SOEs.

In addition to mergers, consolidations, acquisitions and spin-offs, it expressly recognises share transfers, non-cash capital injections involving shares and other restructuring mechanisms.

The express recognition of share transfers is the most consequential change in this section. In recent years, the Government has increasingly reorganised its SOE portfolio through transfers of shareholdings among SOEs and sectoral holding companies rather than through traditional mergers. The Draft Regulation now provides a clearer legal basis for these transactions, which may facilitate future reorganisations within the Danantara ecosystem.

The inclusion of "other restructuring mechanisms" also provides flexibility for future policy development. While the scope of this provision will likely depend on further implementing regulations, it gives the Government room to adopt transaction structures that may not fit neatly within conventional corporate law concepts.

Privatization: Evolution Rather Than Reform

Privatization has attracted the most public attention since the Draft Regulation was circulated. However, a closer reading suggests that the Draft Regulation does not fundamentally liberalize Indonesia's privatization regime. Rather, it updates the governance framework while preserving a high level of State oversight.

The existing privatization methods remain largely unchanged, namely through capital market transactions, direct sales to investors, or sales to management and/or employees. Likewise, privatization continues to require multiple layers of approval, including presidential approval, parliamentary oversight and review by the Privatization Committee. 

One notable development is the recognition of Danantara's role in proposing the privatization of the Series B shares under its management. However, BP BUMN continues to play a central role in the overall approval process.

Accordingly, the Draft Regulation appears to preserve the Government's long-standing policy that privatization is not merely a commercial divestment exercise, but also a strategic policy decision involving broader public interest considerations.

Why Does This Matter?

The Draft Regulation reshapes how SOE restructurings and privatizations will be initiated, reviewed and approved going forward.

For SOEs, it establishes a more structured legal framework for implementing corporate reorganizations and managing financially distressed businesses. For investors, lenders and transaction counterparties, it provides greater visibility on the approval process and the respective roles of Danantara and BP BUMN, which should assist in assessing transaction timelines and execution risk.

The Draft Regulation also reflects the Government's broader policy direction of managing SOEs on a portfolio basis rather than as standalone enterprises. This may facilitate further consolidation within the SOE ecosystem, particularly through intra-group restructurings, holding company reorganizations and strategic sector consolidation.

ABNR Commentary

Overall, the Draft Regulation is a welcome development. It provides a clearer legal framework for SOE restructuring, formally recognises restructuring mechanisms that have increasingly been used in practice, and clarifies the respective roles of Danantara and BP BUMN. That said, the Draft Regulation also raises several governance questions that are likely to shape market practice.

First, the expanded role of Danantara prompts questions about corporate decision-making within SOEs. As Danantara becomes increasingly involved in approving and directing strategic restructurings, the extent to which boards of directors continue to exercise independent business judgment under the Company Law may come under closer scrutiny. This is particularly relevant given that directors remain subject to fiduciary duties and may be personally liable for losses arising from their management decisions.

Second, the allocation of liability remains an important question. While the Draft Regulation introduces a new approval framework, it does not appear to alter the allocation of responsibilities under the Company Law. Where a restructuring is initiated or driven through the new governance framework, it remains to be seen how responsibility will be assessed if the transaction subsequently results in losses or becomes subject to legal challenge.

Finally, for listed SOEs, portfolio-level objectives may not always align with company-level obligations. As Danantara manages SOEs on a portfolio basis, future restructurings will need to be carefully balanced against directors' duties to act in the best interests of the individual company, as well as the rights of minority shareholders under Indonesia's capital markets regime.

How these issues develop in practice may ultimately prove as significant as the institutional reforms introduced by the Draft Regulation itself.

By partners Ayik C. Gunadi (agunadi@abnrlaw.com), Novario Asca H (nhutagalung@abnrlaw.com), and associate Afif Hirzi (mhirzi@abnrlaw.com).

Note

This legal update is based on the Draft Government Regulation on the Restructuring and Privatization of SOEs. The regulation remains in draft form and may be amended before issuance.

This ABNR client alert is intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. It does not constitute legal advice and should not be relied upon as such. ABNR accepts no liability of any kind in respect of any statement, opinion, view, error or omission that may be contained in this update. You are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could affect your rights and obligations under Indonesian law.