The Indonesian Government's Red Carpet For Foreigners To Occupy The Position Of The Directors Of SOEs What Is The Goal?

President Prabowo Subianto paid tribute before entering the presidential plane of Garuda Indonesia 1 at Galeao Air Base, Rio de Janeiro, Brazil, July 7, 2025. (BPMI Setpres)

JAKARTA The Indonesian government provides a red carpet for foreign nationals (foreigners) to sit in the strategic position of State-Owned Enterprises (BUMN). The observers' opinion is divided into two regarding this decision.

Recently, Garuda Indonesia appointed two foreigners to fill the board of directors. They are Neil Raymond Mills from England as director of transformation, and Balagopal Kunduvara from Singapore as director of finance and risk management.

President Prabowo Subianto said that the management of SOEs must comply with international business standards, so it is also necessary for foreigners to sit in it. Meanwhile, Minister of State Secretary Prasetyo Hadi said there was nothing wrong with recruiting foreigners in SOEs.

"If Indonesian citizens are able, we will encourage them. If then we feel for a while we need the skills and competence of someone who happens to be a foreigner, why don't you think so," he said.

Recruitment of foreigners in SOEs has drawn mixed reactions. Indonesia Corruption Watch (ICW) assesses that the provisions for foreigners to become directors of SOEs are policies that are not in accordance with the solutions to existing problems.

ICW considers Prabowo not to have strong arguments to recruit foreigners to become directors of SOEs.

Provisions for foreigners to become bosses in state-owned companies are contained in the latest BUMN Law. The rules regarding foreigners are not clearly stated, because the main requirements to become members of the company's board of directors are Indonesian citizens.

Prior to the enactment of Law no. 16 of 2025, one of the requirements to become a director of the company is Indonesian citizens. Initially, Article 15A paragraph (1) letter a stated that to become a member of the board of directors, must be an Indonesian citizen.

But after the change, there is one additional paragraph in the article. Article 15A paragraph (3) reads, 'Requirements as referred to in paragraph (1) letter a can be determined by the BUMN Management Body (BP).' Thus, members of the SOE board of directors are no longer required to have the status of Indonesian citizens.

According to ICW, there are three notes that are in the spotlight on the change in the BUMN Law. First, the potential for the selection process that is not transparent in the appointment of foreigners as members of the SOE board of directors.

Second, obstacles in taking action against foreigners. Third, the status and obligations of foreign nationals as members of the SOE board of directors," wrote ICW in a statement received by VOI.

One of the weaknesses of SOEs is the high level of corruption in the board of directors. According to ICW data, from 2016 to 2024 there were 234 corruption cases with a total of 400 state-owned officials as suspects. State financial losses due to corruption in SOEs amounted to Rp68 trillion.

For this reason, said ICW, the appointment of expatriates in the management of SOEs and the application of international standards to a number of state-owned companies does not automatically improve and ensure the governance of companies that are clean from corruption.

ICW also has records of law enforcement against bribes that occur outside Indonesia.

"One of the weaknesses in the Anti-Corruption Law is the vacancy of regulations regarding extra-territorial jurisdictions. As a result, bribes committed outside Indonesian territory cannot be taken," wrote ICW.

In addition, prosecution of cases involving foreign parties also requires cooperation with other countries. These efforts were made through the Mutual Legal Assistance (MLA) mechanism or mutual assistance with the aim of tracking assets and the need to prove trial in Indonesia. However, mutual assistance with other countries often encounters problems.

ICW noted that at least two cases were hampered by cooperation with abroad involving foreigners and SOEs.

First, the Rolls-Royce bribery case by Emirsyah Satar, Managing Director of PT Garusa Indonesia. He was proven to have accepted a bribe of USD2 million from Rolls-Royce to buy a number of aircraft engines he made. However, because the bribes were British citizens, no further action was taken because the bribes did not occur in Indonesian jurisdiction.

Second, the corruption case by ECW Neloe, a President Director of PT Bank Mandiri which caused state financial losses of up to Rp120 billion. ECW Neloe is suspected of transferring most of his assets to Swiss Bank. Indonesia, which at that time did not have an MLA agreement with Switzerland, finally had difficulty obtaining account information belonging to ECW Neloe. As a result, the return of state financial losses was not optimal.

"The entry of foreigners as state administrators without any review of the weaknesses of laws and regulations in Indonesia will complicate the disclosure of cases involving foreigners," said ICW.

"Especially in terms of asset tracing that has the potential to be transferred to the country of origin of foreigners. This must be a special concern for law enforcers, to ensure that there is no impunity to state officials with the status of foreigners," he added.

Herry Gunawan from the NEXT Indonesia Center research and publication institute saw the potential to recruit foreigners in BUMN. According to him, expatriates are more likely to comply with global corporate governance, and have no burden on local political interests.

But he also did not turn a blind eye to the potential weakness. Among them is the possibility of glare at foreigners, considering foreigners to be more competent, even though they are not necessarily.

In addition, opening up opportunities for foreigners to occupy state-owned directors can also be considered as neglect of local human resources. So far, the government has used a systemtalent pool, a forum for finding directors and commissioners of SOEs who have qualified capabilities.

Herry added that the government's move to open up opportunities for foreigners is a signal from President Prabowo to SOE directors to improve performance and suppress corruption. However, the main solution to dealing with this problem is not to replace local people with foreigners, but to enforce firm law against corruptors in SOEs.

"If the board of directors is corrupt, the law is severe and confiscated of their assets. Not replaced by foreigners," he concluded.