The Indonesian government plans to privatise state-owned enterprises (SOE) with revenue below 50 billion rupiah ($3.46 million) as part of its reform efforts.

SOE minister Erick Thohir said many SOEs did not run their business in an optimal way. Such companies had become a burden and were weighing on the financial performance of SOEs that fare better.

“I have actually said this in the previous hearing, that the number of SOEs is too high, and when there are too many, it is hard to control them, and that eventually leads to small operations that are hard to consolidate,” Erick said last week in a hearing with House of Representatives Commission IV, which oversees SOEs.

Since 2019, the government has doubled down on its efforts to restructure and refocus SOEs. The number of SOEs has dropped to just 41, down from 113 in 2019, recent Statistics Indonesia (BPS) data show.

SOEs’ net profit fell by 77 per cent to 28 trillion rupiah last year, while revenue fell 25 per cent to 1.2 quadrillion rupiah, as the Covid-19 pandemic led to mobility restrictions and hit household spending.

The government would first identify state-run businesses with revenue below the threshold and then sell them to private parties, according to Erick.

“We will open tenders, so we can also create jobs and new entrepreneurs in new regions,” he said.

“All this time, SOEs have been accused of killing businesses and entrepreneurs in regions.”

Erick added that the government hoped this plan would help SOEs operate with more focus and revenue going forward.

THE JAKARTA POST/ASIA NEWS NETWORK