SINGAPORE, Press Spotlight – The idea of establishing a super holding company for Indonesia’s state-owned enterprises (SOEs) has resurfaced, following President-elect Prabowo Subianto’s plans to reorganize the Ministry of SOEs. The initiative aims to professionalize SOE management by closely mirroring Temasek, Singapore’s globally successful holding company.
Prabowo’s economic team, represented by Laode Masihu, stated that SOE reform is one of the new administration’s top priorities. “There are many benchmarks, but the closest example is Temasek. It will be something like that,” said Laode on Friday (11/10/2024), as quoted by Antara.
Laode explained that the economic team will also look to China’s SOE management model for inspiration. This move is expected to help Indonesia achieve economic growth of up to 8 percent over the next five years.
What is Temasek?
Temasek is a global investment holding company established in 1974 by the Singaporean government to manage its assets and investments commercially. Over time, Temasek has expanded its global reach, holding significant shares in companies worldwide. In Indonesia, for example, Temasek is the second-largest shareholder in Telkomsel through Singapore Telecom Mobile (Singtel).
As a super holding company, Temasek manages state-owned assets while generating substantial returns for Singapore through its diverse global investments. Temasek was born out of the vision of Singapore’s founding leader, Lee Kuan Yew, who sought to separate business management from government functions, allowing the government to focus on policymaking and regulation.
Indonesia’s Super Holding Plan
A super holding company is designed to manage a group of state-owned enterprises (SOEs) under a single umbrella, led by professional managers. A holding company oversees several companies within a group, while a super holding is a combination of multiple holdings under one entity.
Prabowo’s plan to emulate Temasek’s model is seen as a strategic move to professionalize Indonesia’s SOEs, which have historically been subject to political influence. In this system, political involvement is limited to the selection of CEOs and some board positions, while business operations are managed independently by professionals.
Khazanah Malaysia: Another Example of a Super Holding
In addition to Singapore’s Temasek, another successful super holding is Malaysia’s Khazanah Nasional Berhad, which manages Malaysia’s state-owned assets professionally. Khazanah is led by a chairman who serves as an ex officio, with the role usually held by the Malaysian Prime Minister. Unlike Indonesia, Malaysia no longer has a Ministry of SOEs, as Khazanah fully handles SOE management.
In both Singapore and Malaysia, politics still plays a role in CEO appointments, but interference in day-to-day operations is minimal, allowing businesses to operate more efficiently.
In contrast, Indonesia’s SOEs are still heavily influenced by the Ministry of SOEs, which remains part of the government bureaucracy. It is common for SOE board members to be selected from high-ranking government officials, military and police retirees, political party members, and even presidential campaign volunteers, often resulting in less professional management.
By adopting a Temasek-style super holding model, Indonesia hopes to run its SOEs more efficiently and significantly boost the nation’s economic growth.