Improving Performance of Indonesia State-Owned Enterprises Holding; Policies and Strategies

Abstract

The government has issued several policies to improve the performance of State Owned-Enterprises (SOEs), namely by establishing ABC SOEs or BUMN Holding, providing additional capital, guaranteeing the purchase of ABC SOEs products such as bio ethanol and bio diesel to be purchased by PT Pertamina, excess electricity supply from the sugar mills to be purchased by PT PLN. Meanwhile, ABC SOEs Holding has also implemented a strategy to improve the performance of ABC SOEs Holding and its subsidiaries. Unfortunately, the implementation of those policies and strategies have not been able to improve ABC SOEs Holding performance as expected. We use Soft System Methodology (SSM) as frame work, which is combined with the strategic assumption surfacing and testing (SAST) and interpretive structural modeling (ISM). This study concludes that actions must be taken to improve the performance of ABC SOEs Holding: 1) strengthening of definite legal rules related to SOEs, 2) handling negative issues of plantation products, 3) synergy of holding and subsidiary decision making, 4) independent assessment of holding’s performance, 5) strengthening subsidiary governance, 6) increasing capability and integrity of human resources, 7) strengthening technological development for production and distribution efficiency, and 8) developing talent pool for innovation improvement.