UI Doctoral Awarder Warns that SOEs' Corporatization Must Not Ignore the Rights of Citizens

JAKARTA - The transformation of the State-Owned Enterprises (BUMN) governance through the establishment of Danantara is considered to have major consequences for the legal position and public accountability of BUMN. In the midst of strengthening the orientation of corporatization, the public character of BUMN is said not to be eroded.

This view was conveyed by the legal academic of the State Islamic University (UIN) Syarif Hidayatullah Jakarta, Fathudin Kalimas, while presenting the results of his doctoral research at the Faculty of Law, University of Indonesia, Monday, February 9.

According to Fathudin, after the formation of Danantara, the direction of state-owned enterprise management is increasingly emphasizing corporate logic. However, this change, he said, does not necessarily remove the obligation of state-owned enterprises as a state tool to serve the public interest.

"After Danantara, the spirit of managing SOEs is indeed becoming more corporate. However, constitutionally, the public character of SOEs cannot be set aside. This is where the problem of accountability arises, especially when the decisions of SOE officials directly impact the rights of citizens in the context of public services," said Fathudin.

He explained, the BUMN Persero is in a unique space that brings together two major interests at once. On the one hand, it is required to be efficient and profitable, but on the other hand, it still carries the mandate of public service.

"BUMN Persero cannot be understood solely as an entity with private logic, but also contains an inherent and inalienable public character," said the Director of Post-Graduate Studies and Research at UIN Syarif Hidayatullah Jakarta.

The tension between the two logics, continued Fathudin, was further strengthened after the large restructuring of SOEs and the formation of Danantara which encouraged further corporatization.

He reminded that the Constitutional Court through a number of decisions, including the Constitutional Court Decision Number 48/PUU-XI/2013, has confirmed that SOEs cannot be treated entirely as pure private entities even though they are in the form of limited liability companies.

One of the crucial issues highlighted by Fathudin is the lack of uniformity in legal views regarding whether the decisions of SOEs officials can be tested through the State Administrative Court (PTUN).

Based on a study of the PTUN decisions for the period 2010-2025, he found that there were various interpretations of judges about the public function of the BUMN Persero. "The crucial issue is not the legal status of BUMN, but the functions and sources of authority that are carried out. When BUMN officials exercise public authority, for example in the context of public services or PSO assignments, then the decision is normatively relevant to be tested at the PTUN," said Fathudin.

This approach, according to him, is in line with the development of modern state administrative law which increasingly emphasizes the functional approach. "In this paradigm, the main benchmark is no longer who the perpetrator is, but what functions and authorities are carried out," he said.

He cited practices in a number of countries such as the Netherlands, Germany, and France, which have previously opened up judicial control of private entities that carry out public mandates.

"The experience of these countries shows that the expansion of the supervision of administrative judges over non-state entities is a universal tendency in modern legal states. Indonesia should not be left behind, especially in the context of protecting the rights of citizens," said Fathudin.

According to him, the post-Danantara condition actually requires a clearer accountability mechanism to be strengthened so that the transformation of SOEs does not create a legal oversight vacuum.

He recommended that the authority of the PTUN be strengthened as an instrument of judicial control over SOEs policies. In addition, harmonization between the SOE Law and the State Finance Law is considered urgent in order to prevent a dual interpretation of the status of state wealth in SOEs.

"The transformation of SOEs must not sacrifice the principle of the rule of law. In fact, in the midst of increasingly strong corporatization, public accountability mechanisms must be strengthened," he said.

Fathudin's view was delivered in conjunction with his success in obtaining a Doctor of Law degree from the University of Indonesia through a dissertation entitled "The Public Function of BUMN Persero as the Rationality of the Object of Dispute of the State Administrative Procedure in 2010-2025".

The research he has conducted is expected to make an important contribution to formulating the direction of SOEs in the future, especially in ensuring that business orientation does not eliminate SOEs' constitutional responsibilities to society.