Matchmaking: Establishment of state-owned holding companies in Indonesia

Kyunghoon Kim

Asia and the Pacific Policy Studies from Crawford School of Public Policy, The Australian National University

Abstract: Under the government of President Joko Widodo, Indonesia's state†owned enterprises (SOEs) have become the driver of the national development strategy. The current administration is actively using SOEs to conduct development projects based on the belief that SOEs are able to fix market failures and support the fiscally constrained government. In order to strengthen the role of SOEs, the Indonesian government is pursuing a medium†term plan of creating sector†based holding companies. The government expects that these state†owned holding companies (SOHCs) will enable SOEs to expand investment and benefit from synergies. However, considering political hurdles in implementing this policy, the process of establishing SOHCs is expected to advance gradually. The government also continues to face challenges clarifying and communicating the rationale behind creating SOHCs. This paper examines the current political economic context of SOE ownership reorganisation in Indonesia and diverse views on the expected consequences of forming SOHCs.

Keywords: corporate governance; economic nationalism; state capitalism; state-owned enterprise; state-owned holding company (search for similar items in EconPapers)
Pages: 18 pages
Date: 2018-05-21
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Published in Asia & the Pacific Policy Studies, May 2018, pages 313-330

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Persistent link: https://EconPapers.repec.org/RePEc:een:appswp:201823

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