Foreigners In SOEs Are Not Problem-Free Guarantees, Observers Remind Moral Hazard Risk

BP BUMN (intermediate)

JAKARTA - The government's decision to place expatriates or foreign nationals (WNA) in the leadership ranks of State-Owned Enterprises (BUMN) has received attention. The reason is, the decision is considered not a guarantee that the company is free from problems.

BUMN observer and Director of the Next Indonesia Center, Herry Gunawan, assessed that the policy poses a big risk that cannot be ignored. One of them is the cultural gap of work.

Herry said, the cultural gap of work has the potential to be a real obstacle. Starting from means of communication, decision making, to understanding the bureaucracy in Indonesia.

"There is a cultural gap. This has the potential to make it difficult in managing at the operational level. Not only discussion, but also corporate culture," he told VOI, Friday, October 24.

Then, Herry highlighted the potential for moral hazard by bringing his network into the Indonesian State-Owned Enterprises.

'Not all foreigners are good. If you remember, the 1MDB Malaysian BUMN corruption case involving the Director of Goldman Sach, the official is a Malaysian citizen," he said.

"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 continued.

Furthermore, Herry reminded that the policy of opening a position for foreigners could ignore the Human Resources (HR) development system that has been built by the Ministry of SOEs through a talent pool program.

"Since 2020, SOE directors have been required to prepare talent pools as one of the KPIs for the Board of Directors. The program is already running, namely preparing talents to prospective Directors. With the entry of foreigners, the talent pool program becomes meaningless," he said.

"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 continued.

Previously, the Government allowed expatriates or Foreign Citizens (WNA) to lead State-Owned Enterprises (BUMN) companies.

Then, what are the rules regarding this?

Head of the Investment Management Agency (BPI) Daya Anagata Nusantara (Dantara), Rosan Roeslani, said the provisions were in Law (UU) number 16 of 2025 concerning the fourth amendment to the BUMN Law number 19 of 2003.

"Just look at the law later. It must be seen, read more deeply. Don't cut it into pieces," said Rosan when met in Jakarta, Monday, October 20.

Referring to the BUMN Law, the requirements for SOE leadership are separated between SOEs with the status of the Company and Perum. Article 15A paragraph (1) point a states that in order to become a member of the Persero board of directors, it must meet the requirements of Indonesian citizens (WNI).

However, Article 15A paragraph (3) states that the BUMN Regulation Agency (BP) can change the requirements of these Indonesian citizens.

Then, Article 43C paragraph (1) point a states, to become a director of BUMN Perum must meet the requirements of Indonesian citizens. However, in paragraph (3) article 43C, it is stated that this requirement can also be changed by BP BUMN.