Indonesia's State-Owned Enterprises (Badan Usaha Milik Negara – “BUMN”) have a significant role to play in terms of the country’s social welfare and also act as the state’s representatives within the business sector. Unlike private entities, BUMN must take into account the overall contributions which are made to society in addition to any profits which may be generated. This is because BUMNs are established through the use of state assets and are entitled to enjoy certain privileges when engaging in any business, such as being prioritized during project offering auctions and when seeking to obtain shares in any divested private entities within certain sectors, and so on.
 
Indonesia currently has some 118 BUMNs which are operating across a number of different business sectors.[1] In line with the government’s target of accelerating certain infrastructure projects across various regions of the country, BUMNs are expected to maximize opportunity and current BUMN Minister, Rini Sumarno, is confident that the Indonesia’s BUMN will post a total combined profit of IDR 205 trillion this year.[2]
 
However, the House of Representatives (“House”) takes the view that the current law on BUMN, namely Law No. 19 of 2003 on State-Owned Enterprises (“BUMN Law”), is now obsolete and is unable to adequately accommodate the country’s current economic climate and needs. Therefore, the House has now initiated deliberations of the Draft Bill on State-Owned Enterprises (“Draft Bill”), which will ultimately repeal and replace the current BUMN Law.[3] Thisweek’s edition of Indonesian Law Digest (ILD) will analyze, discuss and elaborate upon the most significant provisions which are set out within the Draft Bill, specifically: