The Entry Of Foreigners To SOEs Is Considered To Be Prabowo's Hard Message For Local Directors

JAKARTA - The placement of expatriates or foreign nationals (WNA) to occupy strategic positions in state-owned enterprises (BUMN) is considered a firm political message from President Prabowo Subianto to the board of directors and commissioners who have not shown significant changes.

BUMN observer and Next Indonesia Center Director, Herry Gunawan, assessed that this step is the culmination of a series of Presidential warnings on the performance and governance of state-owned companies.

In my opinion, the appointment of foreigners in the ranks of SOE leaders could be the climax or peak of the president's warning to SOEs. Previously, the president had given many warnings to SOEs. For example, reprimanding the many corruptions, then there were SOEs who lost paying bonuses, and others," he said in an official statement, Friday, October 24.

Herry said the decision was a strong signal that the government would no longer tolerate stagnant SOE performance.

"This time, it seems that the president wants to give a tougher message, if there is no significant change in the management of BUMN, it is not impossible that the government will replace its leadership with foreigners," he said.

"Therefore, many are ready to be eliminated, especially the Directors who come from within the country, especially those who are appointed because of encouragement from officials or dealing with political parties," he continued.

However, Herry reminded that the step to open space for foreigners in BUMN is not without risk. There are a number of challenges to watch out for, especially regarding cultural differences and moral hazard potential.

'Not all foreigners are good. If you remember, the 1MDB Malaysian BUMN corruption case involving the Goldman Sachs Director, the official is a Malaysian citizen. So, you still have to be vigilant with foreigners, because there is a potential moral hazard by bringing the network into Indonesian SOEs. Indonesian citizens and foreigners have the same potential for misappropriation," he said.

Furthermore, Herry highlighted that this policy could actually ignore the human resource development system (HR) that had been built in the BUMN environment.

"Because, there is a SOE Regulation in 2020 related to the management contract that the Board of Directors must prepare a talent pool as one of the KPI for the Board of Directors. The program is already running, namely preparing talents to candidates for the Board of Directors," said Herry.

According to Herry, the entry of foreigners in strategic positions will make the talent pool program lose meaning, because opportunities for local talent are automatically narrowing.

"With the entry of foreigners, the talent pool program becomes meaningless. So there is a missing part of the Board of Directors' assessment criteria. In fact, talents who have been selected, even participate in competency development, the opportunity is decreasing," he said.