April 11, 2025 | 04:48 pm
TEMPO.CO, Jakarta - The management of state-owned banks is being overhauled, in line with the government’s plan to give them many assignments. It risks causing economic and political turmoil.
PRESIDENT Prabowo Subianto should not risk playing with fire when managing state-owned banks. The 1998 crisis taught us that political and economic turmoil became unbearable when the banking system collapsed. With their control of almost half the assets of the national banking system, state-owned banks could be a source of disaster if they are managed like the banks owned by tycoons were during the New Order era.
The concerns about the potential worsening of bank management are not excessive. Since the beginning of the year, the Prabowo administration has shown continual signs of turning state-owned enterprises (SOEs) into a development machine—or to be more exact, a tool of the government.
Through a revision to the SOEs Law and the issuing of Government Regulation No. 10/2025, Prabowo is transferring 99 percent of the shares in state-owned companies to Daya Anagata Nusantara Investment Management Agency (Danantara). Some of the shares in 14 share-issuing SOEs have been transferred to Biro Klasifikasi Indonesia, the Danantara operational holding entity. Four of these are state-owned banks, namely Bank Rakyat Indonesia, Bank Mandiri, Bank Negara Indonesia, and Bank Tabungan Negara.
At almost the same time, the government is to assign these SOEs with funding the construction of three million homes and the establishment of the Red and White Village Cooperatives. These two programs are just a couple of the 83 priority activities in the 2025-2029 National Medium-Term Development Plan (RPJMN) rolled out by Prabowo at the start of February 2025. According to the latest RPJMN document, in order to achieve the target of 8 percent economic growth in 2029 promised by Prabowo, development for the next 5 years will require funding of at least Rp24.5 quadrillion. The state can only afford to fund less than a third of this.
Therefore, it is understandable that many people suspect that the overhaul of state-owned banks management at the end of March is an endeavor by the government to achieve a number of Prabowo’s ambitions. Although changes to management are routine, the scale of the political intervention in the SOEs has frequently resulted in company managers being loyal to the authority, rather than acting professionally.
This politicization of SOEs always leads to serious problems. The bitter experience of state-owned construction companies is proof of this. They are still ensnared with financial problems as a result of reckless assignments during the era of President Joko Widodo.
The impact of the politicization of SOEs will be worse and more systemic if it also impacts state-owned banks. As of the end of December 2024, the assets of the four banks totaled Rp5,276 trillion, or 42 percent of total national banking assets. This figure is equivalent to one third of the total assets of the Indonesian financial sector. If just one of these state banks fails, the national financial system could also collapse.
Prabowo must stop his way of governing that seems to be repeating the way the banks were managed before the 1998 economic crisis, when tycoons turned their banks into money machines to recklessly fund their businesses, causing them to collapse and trigger economic turmoil. Now the government has become the actor using the excuse of this being in the interests of development. Prabowo is currently digging the grave of the national economy, and also of his administration.
Gov't: Evacuation of Gazans to Indonesia Not Permanent
2 jam lalu
Indonesian Foreign Minister stated the relocation of Gaza residents to Indonesia is not permanent. They will return to Gaza when the situation improves.
Prabowo Seeks Talks with Trump
2 jam lalu
Indonesian Foreign Minister Sugiono said the meeting request between Prabowo and U.S. President Donald Trump was made before the tariff hike.
Prabowo Set to Join Antalya Diplomacy Forum in Turkey
6 jam lalu
Indonesian President Prabowo Subianto's visit to the international forum in Turkey is a crucial agenda point in his official visit.
Indonesia, Turkey Pledge Support for Palestinian Independence
10 jam lalu
Indonesian President Prabowo Subianto and Turkish President Recep Tayyip Erdogan agreed to support Palestinian independence.
Indonesia's Prabowo Calls on Turkiye for Effort in Building Global Civilization
17 jam lalu
President Prabowo expressed Indonesia's transformation and its commitment to collaborate with Turkiye for the welfare of its people
Hashim and IKN Authority Partner to Establish Orangutan Sanctuary in Nusantara
17 jam lalu
The construction of the orangutan sanctuary is feared to be the basis for clearing the natural habitat of remaining orangutans around the IKN area.
Indonesia Proposes Negotiation Points to the U.S. Over 32% Import Tariff
20 jam lalu
The Indonesian government has proposed several points for negotiation in response to the United States imposing a reciprocal import tariff of 32%.
Indonesia Affirms 'Temporary' Plan to Shelter Gaza Refugees
21 jam lalu
Foreign Minister Sugiono asserts that Indonesia will accommodate Palestinian refugees from Gaza temporarily.
Press Council Flags Prabowo's Exclusive Interviews with Limited Media Outlets
22 jam lalu
The Indonesian Press Council urges Prabowo to refrain from continuing this pattern of interviews.
Jakarta Governor Removes Bank DKI IT Director, Cites Potential Fund Leak
22 jam lalu
Jakarta Governor Pramono Anung dismissed city-owned Bank DKI's IT Director, Amirul Wicaksono, from his position.
