Indonesia’s Danantara plans to slash the number of state-owned enterprises from 1,000 to only 200 because more than half are loss-making, according to Pandu Sjahrir, chief investment officer of the sovereign wealth fund.
He said just eight firms account for 95% of dividends paid to the government by state-owned enterprises, and that 55% are operating at a loss.
“So our job now is to determine if we can fix these loss-making companies through consolidation,” he said at an investment forum in Jakarta on November 20.
Separately, Febriany Eddy, managing director of Danantara, said some state-owned enterprises may be liquidated for engaging in “unhealthy competition”.
“Some companies, particularly state-owned construction companies, still undercut each other’s prices to win project tenders. This kind of thing is very unhealthy. It doesn’t make sense. We are killing each other inside,” she said at a press conference on November 18.
Danantara is Indonesian President Prabowo Subianto’s main vehicle to achieve his 8% economic growth target by 2029 by managing all shares of state-owned enterprises and reinvesting the dividends in commercial projects.
The wealth fund is often described by officials as Indonesia’s version of Temasek Holdings, Singapore’s state investment company.
