LEGAL RISKS FOR THE BUSINESS OF PERSERO’S STATE OWNED ENTERPRISE (SOE) AND THEIR IMPLICATIONS FOR STATE FINANCE

Abstract

This research focuses on legal aspects, notably the risks faced by the management of state-owned enterprises which result in losses to state finances and might potentially cause cases of corruption. The constraints experienced by the Directors of SOE are induced by the established regulation of legal norms in the SOE Law and the Limited Liability Company Law. They result in the ineffectiveness of SOE Directors in the development of Indonesian economy. The study is scrutinises risk management, which enforces normative juridical methods based on primary legal materials. The research findings show that the laws regulating SOEs’ activities prove discriminatory when compared to those for privatelyowned enterprises. Moreover, they hinder integration of the economy into the dynamic global business environment, even though these types of business entities are the primary economic agents in the national economic development. Coordination of efforts is needed for harmonization of laws and regulations, so that the business risks carried out by the Directors of SOE should be very low and ensure legal certainty in managing busines.