16 Oct 2026
Indonesia’s SOE Reform Agenda Continues: Key Changes Introduced by GR 38/2026

The Government has issued Government Regulation No. 38 of 2026 on the Management of State-Owned Enterprises (“GR 38/2026”), effective 21 August 2026. It is an implementing regulation of Law No. 19 of 2003 on State-Owned Enterprises, as last amended by Law No. 16 of 2025 (the “SOE Law”).

GR 38/2026 further operationalises the governance reforms introduced under the amended SOE Law and establishes a more comprehensive framework for the management, restructuring and dissolution of state-owned enterprises (“SOEs”).

Among other matters, GR 38/2026:

• clarifies the respective roles of the SOE Regulation Agency (Badan Pengaturan Badan Usaha Milik Negara or “BP BUMN”), the Daya Anagata Nusantara Investment Management Agency (Badan Pengelola Investasi Daya Anagata Nusantara or “BPI Danantara”) and the Minister of Finance in exercising the State’s ownership functions;

• introduces a separate governance regime for SOEs designated as fiscal instruments (alat fiskal);

• establishes an express framework for SOEs to undertake cut loss measures;

• provides regulatory protection for directors and management personnel implementing qualifying cut loss decisions;

• introduces a clearer framework for the dissolution of non-viable SOEs; and

• establishes a structured mechanism for resolving disputes within the SOE group.

Clarification of the Post-Danantara Governance Framework

GR 38/2026 further implements the governance structure introduced under the amended SOE Law. Under this structure, BPI Danantara holds the State’s economic interest in SOEs through 99% Series B Shares, while the State retains a 1% Series A Dwiwarna Share. This share carries special rights not available to other shareholders to safeguard the public interest and the continuity of Government programmes.

The regulation also clarifies the respective functions of BP BUMN and BPI Danantara in exercising governance and shareholder powers within the SOE sector.

A notable exception applies to SOEs designated by the President as fiscal instruments. In such cases, the Minister of Finance exercises the powers that BP BUMN and/or BPI Danantara would otherwise exercise as shareholder. These powers include approving business plans, providing capital support and implementing government assignments.

A New Framework for Loss Limitation

GR 38/2026 introduces an express framework for “Cut Loss” (pembatasan kerugian) that allows SOEs to take Cut Loss measures as part of managing their assets and receivables.

The framework permits SOEs to undertake certain asset write-offs and receivables management actions where doing so may result in a loss but is considered necessary to prevent a greater loss. The framework also applies, with appropriate adjustments, to SOE subsidiaries.

GR 38/2026 acknowledges that prudent asset management can sometimes require an SOE to recognise a loss formally, particularly in restructurings and reorganisations, or when dealing with distressed assets or unrecoverable receivables.

Regulatory Protection for Directors and Management

GR 38/2026 also introduces regulatory protection for directors and management personnel who approve or implement qualifying Cut Loss measures.

The protection is available only where prescribed requirements are satisfied, including:

• adequate analysis demonstrating the potential for a greater loss if the proposed action is not taken;

• no fault, negligence or conflict of interest on the part of the relevant decision-makers; and

• assessment by an independent consultant or a competent government institution.

GR 38/2026 provides that, although losses arising from a qualifying Cut Loss remain losses of the relevant SOE, directors and management personnel will not be held personally liable if these requirements are met. However, this protection does not exclude or limit liability under other laws and regulations, including Law No. 40 of 2007 on Limited Liability Companies, as amended (the “Company Law”), Law No. 1 of 2023 on the Criminal Code and Law No. 31 of 1999 on the Eradication of Criminal Acts of Corruption, as amended.

BP BUMN is expected to issue further implementing regulations, which will shape the practical requirements for relying on this protection.

SOE Dissolution

GR 38/2026 sets out a framework for the dissolution of SOEs that can no longer realistically be restructured, rehabilitated or rescued.

The dissolution process remains subject to the Company Law (for a Persero) and applicable sector-specific regulations. GR 38/2026 provides a regulatory framework for the orderly winding-up of non-viable SOEs, complementing the broader emphasis on asset quality and capital efficiency reflected throughout the regulation.

Persero

A Persero (an SOE in the form of a limited liability company) may be dissolved by a resolution of its general meeting of shareholders, including where it no longer satisfies one or more of the requirements for restructuring for recovery and rescue purposes. A Persero may also be dissolved on other grounds, such as a court order, insolvency or expiry of its term. The dissolution is then effected by a government regulation. Where it results from a shareholders’ resolution, the Head of BP BUMN proposes the draft regulation to the President, based on a study prepared in coordination with BPI Danantara. For the other grounds, the draft regulation must be submitted promptly and is purely administrative. Dissolution is followed by liquidation under the Company Law.

Perum

A Perum (an SOE wholly owned by the State whose capital is not divided into shares) may be dissolved where it no longer satisfies one or more of the requirements for restructuring for recovery and rescue purposes. It may also be dissolved on other grounds, including the expiry of its term, a court order, revocation of a bankruptcy declaration because its assets cannot cover the bankruptcy costs or insolvency. In all cases, dissolution is effected by a government regulation.

Where the Government proposes dissolution, the Head of BP BUMN submits the proposal to the President after consulting the relevant commission of the House of Representatives and based on a supporting study. The study may draw on input from the relevant technical ministry, other government agencies and independent consultants. A technical ministry proposing dissolution must first submit its proposal to the Head of BP BUMN for review and coordination.

A dissolved Perum must be liquidated. The Head of BP BUMN generally appoints the liquidator. However, where a court orders the dissolution, or the Perum is unable to pay its debts under the bankruptcy laws, the applicable laws and regulations govern the liquidator’s appointment. GR 38/2026 also prescribes procedures for creditor notification and claims administration, including publication requirements, registration of the dissolution and deadlines for submitting and disputing claims.

Dispute Resolution Within the SOE Group

The regulation introduces a structured, multi-stage process for resolving disputes involving SOEs, SOE subsidiaries and affiliated companies.

Before a dispute is escalated, the parties are expected to seek an amicable resolution through deliberation and consensus. Where necessary, BP BUMN and/or the relevant operational holding may facilitate discussions or mediate. Arbitration, where the relevant agreement provides for it, and court proceedings remain available.

ABNR Commentary

The Cut Loss framework is likely to be the most consequential aspect of GR 38/2026.

Although Indonesian law has long recognised principles comparable to the business judgment rule, SOE directors have often faced practical uncertainty when taking commercially rational decisions that involve recognising a loss. GR 38/2026 seeks to address this by providing an express legal basis for qualifying Cut Loss measures, and by specifying when directors and management personnel may be protected from personal liability.

In practice, the regulation is likely to place greater weight on robust governance processes, including financial analysis, independent assessments, conflict-of-interest management and thorough documentation of board deliberations and decisions. The focus will increasingly be on whether a decision was taken through an appropriate and well-documented process, rather than solely on whether a loss ultimately occurred.

Read together, the Cut Loss and dissolution provisions signal a broader policy shift towards more disciplined management of SOE assets, closer portfolio oversight and a stronger emphasis on capital efficiency across the SOE sector. The practical significance of these reforms will depend largely on the implementing regulations expected to follow.

By Partners Ayik C. Gunadi (agunadi@abnrlaw.com), Novario Asca (nhutagalung@abnrlaw.com), foreign counsel Gustaaf Reerink (greerink@abnrlaw.com), associate Afif Hirzi (mhirzi@abnrlaw.com), and trainee associate Jennifer Astrid (jastrid@abnrlaw.com)

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.