24 Nov 2025
The Fourth Amendment to the SOE Law: Institutional Realignment and Strategic Reform

Overview

In October 2025, Indonesia issued Law No. 16 of 2024 on the Fourth Amendment to Law No. 19 of 2003 on State-Owned Enterprises (the “Fourth Amendment”)[1] to optimize the management of State-Owned Enterprises (“SOEs”) and accelerate institutional transformation. 

Although this development follows closely on the changes introduced under the Third Amendment in February 2025[2], which launched Daya Anagata Nusantara Investment Management Agency (“Danantara”), the Indonesia’s new sovereign wealth fund, its implications are transformative.

The Fourth Amendment clarifies the reform framework for SOE management by redrawing who controls what. One of the biggest changes is the ownership of the two Danantara-related entities:

• Investment Holding (currently PT Danantara Investment Management), who manages dividends, optimizes SOE assets, and handles assignments from Danantara.

• Operational Holding (currently PT Danantara Asset Management, who oversees SOE operational activities and carries out additional responsibilities set by Danantara. [3] 

Under the Third Amendment, these Holdings were jointly controlled by Danantara and the Minister of SOEs. The Fourth Amendment now grants Danantara sole and full control, including 100% ownership of both entities.

This fourth amendment also separates regulatory and supervisory role from investment management. The Ministry of SOEs is transformed into a regulatory body, now called Badan Pengaturan BUMN or “BP BUMN”, responsible only for regulatory and supervisory role. Danantara, meanwhile, becomes the sole investment and operational manager for the SOE ecosystem. Both institutions report directly to the President. 

Establishment of BP BUMN as the SOE Regulatory Agency

The Fourth Amendment reshapes the government body overseeing the SOE sector by converting the former Ministry of SOEs into BP BUMN, a regulatory agency under and accountable to the President.[4] All references in existing laws and regulations to the “Minister in charge of SOEs” now refer to the Chairman of BP BUMN. With this change, BP BUMN’s role limited to policy formulation, regulation, guidance, and supervision, and no longer on direct ownership or management of SOEs.[5] 

Reallocation of Authority among the Government, BP BUMN, and Danantara

The Fourth Amendment removes the Government’s previous authority to set strategic and operational guidelines (such as in accounting, finance, investment, operations, procurement, and compliance) through its ownership of special shares in the Holdings. These responsibilities are now exclusively vested in Danantara.[6]

Under this structure, BP BUMN acts as a regulatory authority responsible for policy and oversight, while Danantara functions as a state-owned legal entity tasked with enhancing investment performance, optimizing SOE operations, and mobilizing alternative sources of funding.[7] Both entities are directly accountable to the President, which may minimize institutional overlap of authority between the two bodies, and separates the Government’s strategic oversight through BP BUMN from Danantara’s operational execution.

Changes in Ownership and Management of SOEs

The Fourth Amendment confirms that the Holdings are now limited liability companies fully owned by Danantara[8], with the transfer of the Government’s remaining shares required to be completed no later than 6 January 2026.[9] Once this transfer is finalized, the Holdings will no longer be classified as state-controlled entities. This raises an -fundamental issue wherein the Holdings should no longer be eligible to receive state budget allocations, instead depending on Danantara for its capital.[10] 

This new status also raises important legal and governance questions, such as how these non-SOE companies will exercise authority over state assets, and whether their non-SOE status effectively subjects them to less stringent oversight compared to traditional SOEs.

The amendment also clarifies the shareholding structures of SOEs. The Government of the Republic Indonesia’s rights are now fixed at 1% Series A Dwiwarna shares, held by the Chairman of BP BUMN, while Danantara holds the remaining 99% Series B shares.[11] This removes previous ambiguity about the number of special shares the Government is entitled to and confirms the limited scope of its ownership. Dividends from the Series A Dwiwarna shares may be managed directly by BP BUMN, subject to presidential approval.[12] 

Clarification of Governance and Accountability

The Fourth Amendment also revisits several contentious provisions from the Third Amendment. It removes the clause that excluded SOE employees and management from being classified as state administrators (penyelenggara negara), a rule that had effectively limited the authority of the Corruption Eradication Commission (Komisi Pemberantasan Korupsi or “KPK”) in cases involving the misuse of state funds. With this reversal, SOE officers may again fall within the scope of state administrators, potentially allowing the KPK to investigate misconduct within SOEs under public law standards rather than purely corporate-law rules.

At the same time, the amendment strengthens audit oversight by affirming that the Audit Board of Indonesia (Badan Pemeriksa Keuangan or “BPK”) may audit SOEs without needing prior approval from the House of Representatives (Dewan Perwakilan Rakyat or “DPR”), removing procedural barriers that had been introduced under the Third Amendment.

Other Notable Changes

Beyond the structural and governance reforms, the Fourth Amendment introduces several technical adjustments to align related regulations withthe transition from ministerial to regulatory oversight and Danantara’s extended investment mandate.

These provisions include renaming of ministerial roles, introduction of transitional arrangements (e.g., prohibition on dual roles of ministers/Deputy Ministers concurrently holding BUMN posts for a specified period), taxation treatment for transactions involving Danantara and its holdings, and enhanced gender and workforce diversity provisions in SOE leadership. These will be further detailed in forthcoming implementing regulations.

Conclusion: Amendment for the Completion of SOE Law and Danantara

The Fourth Amendment builds on and sharpens the institutional design set out in the Third Amendment. It delineates roles more clearly: BP BUMN assumes regulatory and supervisory functions, while Danantara (through the Holdings) serves as investment and operations manager. It also consolidates the ownership structure by vesting full control of the Holdings in Danantara, with the Government’s role reflected through a symbolic Series A share. While this separation between regulatory/supervisory functions and investment/operations management is intended to optimise SOE governance and accelerate institutional transformation, its practical implementation remains to be seen. In particular, it will be important to monitor how BP BUMN and Danantara coordinate in practice, how their respective mandates are operationalised in implementing regulations, and whether the dual-layer structure streamlines, rather than complicates, approval processes for key SOE corporate actions (e.g., mergers, divestments, major investments, and reorganisations). Clear guidance and well-defined decision-making channels will be critical to ensure that the new framework delivers efficiency gains instead of adding new procedural complexity for SOEs.

At the same time, the new framework raises important legal and governance questions, particularly regarding the authority of the holdings which under the Fourth Amendment are no longer specified as state owned enterprises to control and manage state assets, and whether non-SOE status may entail comparatively lighter oversight than that applied to traditional SOEs.

Ultimately, this reform represents not merely a technical adjustment, but a strategic recalibration of Indonesia’s SOE ecosystem. The amendment advances several overarching policy objectives:

• Institutional clarity – separating regulatory and operational functions for better coordination and efficiency.

• Enhanced governance – strengthening transparency, accountability and Good Corporate Governance (GCG) standards.

• Legal certainty – defining the position of SOEs within the state administration and oversight framework.

• Strategic empowerment – strengthening Danantara as a strategic decisionmaker.

Taken together, these changes signal the Government’s intention to elevate strategy in SOE administration and governance to support economic growth and institutional modernisation, subject to how forthcoming implementing regulations address the legal and oversight questions noted above.

By partner Ayik C. Gunadi (agunadi@abnrlaw.com), senior associate Novario Asca H (nhutagalung@abnrlaw.com), and associates Joshua Situmeang (jsitumeang@abnrlaw.com), and Tanisha Maharani (tmaharani@abnrlaw.com)

This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.