The new bill revising the State-Owned Enterprise Law (SOE Law) has just been passed by the House of Reps (DPR) and officially registered by the Ministry of State Secretariat as Law Number 1 of 2025. This marks the third amendment to Law Number 19 of 2003 concerning SOEs. The new law also marks the victory of the Corporate Theory in State Financial Law, a concept popularized by Prof. Dr. Arifin P. Soeria Atmadja, S.H., in a long debate against the Source Theory school of thought.
The Source Theory asserts that because SOEs receive their capital from the state, their assets should be regarded as public funds, making them subject to strict state supervision and legal scrutiny similar to government agencies. In contrast, the Corporation Theory argues that once the state injects capital into an SOE, the enterprise should operate as a separate legal entity, similar to a private corporation, with its own financial and operational autonomy.
The New SOE Law aligns with the Corporation Theory by reinforcing the separation of assets between the state and SOEs, following the principles of limited liability companies. By doing so, it strengthens the legal distinction between state funds and corporate assets, allowing SOEs to function with greater flexibility and reduced bureaucratic interference while remaining accountable under corporate governance principles rather than rigid government financial controls.
From Ex Post to Ex Ante — A Paradigm Shift
The previous SOE Law, in conjunction with the Anti-Corruption Law, operated under an ex-post paradigm based on the Source Theory. This ex-post paradigm (after the fact—finding out who’s to blame) focused on determining liability after the fact by placing blame on individuals such as members of the Board of Directors, Board of Commissioners, and Board of Supervisors of SOEs. As a result, many council members became hesitant in making decisions, fearing that any action would result in financial losses for the state regardless of intent and could expose them to personal liability and criminal charges.
Consequently, omission—not doing anything—became the safest option, as it was much harder to prove negligence or wrongdoing in cases where no direct decision had been made. This ex-post paradigm created a pervasive culture of risk aversion within SOEs, where executives were more focused on avoiding potential legal repercussions than on making strategic decisions that could drive business growth and efficiency. From time to time, his hesitancy stifled innovation, slowed down decision-making processes, and weakened the overall effectiveness of state-owned enterprises in carrying out their economic and public service mandates.
At the other hand, the new law shifts to an ex-ante paradigm (before the fact—predicting the outcome of a law or a verdict) that’s based on the Corporation Theory, removing the disincentives associated with the old system. This new approach emphasizes that as long as board members act in good faith, with due diligence, and in the best interest of the company, they are protected under the business judgment rule.
There are at least three most important changes on the new law:
- The exclusion of SOEs capital as state assets;
- The removal of Members of the Board of Directors, Board of Commissioners, and Board of Supervisors of SOEs from the classification of state administrators;
- The designation of public accountants as external auditors for annual audits, replacing the previous external audit mechanism, and limiting the role of the Audit Board of the Republic of Indonesia (BPK RI) to specific-purpose audits (PDTT);
These new changes remove the fear of criminalization among board members, ensuring that they are not held personally accountable for financial losses resulting from business decisions made in an honest and prudent manner. This protection encourages them to take calculated risks that are necessary for corporate growth and long-term sustainability, without the looming threat of legal repercussions. The new law emphasizes business judgment rule as a safeguard, preventing criminalization of board members for making decisions that may not have yielded the expected outcomes but were reasonable at the time they were made. As a result, the new law encourages a more proactive and dynamic corporate environment within SOEs, where executives are empowered to focus on strategic decision-making rather than being paralyzed by the fear of prosecution.
Legitimate Concerns vs. Unfounded Paranoia – The New SOE Law & Danantara
The new SOE Law has raised concerns that it will weaken accountability for corruption under the Anti Corruption Law and the previous SOE Law. Critics argue that this law could create space for individuals to avoid responsibility, especially in relation to Article 2 paragraph (1) and 3 of the Anti Corruption Law, which provides prison sentences for those who unlawfully enrich themselves or abuse their authority to the detriment of state finances.
Article 2 (1) of The Anti Corruption Law punishes individuals who unlawfully benefit themselves, others, or corporations at the expense of the state with imprisonment, from four to twenty years, or life, along with heavy fines. Meanwhile, Article 3 mentions those who misuse their position or authority for personal or corporate gain, carrying a sentence of one to twenty years or life, along with financial penalties. These provisions were designed to deter corruption by holding individuals accountable for actions that harm the state economy.
While the new SOE Law shifts to an ex-ante paradigm by prioritizing the principle of business judgment rule, this does not mean it allows corrupt individuals to get away from corruption. Instead, it clarifies that board members acting in good faith and with due diligence should not be criminalized for business decisions that do not yield the intended results. The law still upholds accountability for corruption, ensuring that those who act in bad faith or engage in fraudulent activities to enrich themselves remain subject to prosecution under the Anti-Corruption Law.
Rather than condoning corruption, the new SOE Law aims to strike a crucial balance—encouraging an efficient, business-oriented approach in SOEs while maintaining strict legal accountability for apparent violations. The law recognizes that effective governance requires flexibility to make strategic decisions and a strong legal framework to prevent and punish corruption where it does occur. This change is not about shielding executives from scrutiny, but about ensuring they have the confidence to act in the best interests of the nation without fear of criminalization.
The paradigm shift in Indonesia’s SOE Law has real implications for the people in SOEs and outside of the SOEs. For too long, SOE executives have been paralyzed by fear, avoiding necessary but risky decisions to protect themselves from wrongful criminalization. This new paradigm seeks to break that cycle by encouraging bold, responsible, and strategic decision-making that can drive economic growth, improve public services, and create stronger, and more competitive SOEs. At the same time, it does not abandon accountability. Instead, it shifts the focus from the state financial losses to duty of care, and business judgement rule.
For Danantara, this change is crucial—omission, or choosing not to act, will no longer be the safer option than commission. Decision-makers will now be expected to take calculated risks to generate income for the SOEs rather than hiding behind their inactions. In the long run, this encourages a business culture that values progress over stagnation, ensuring that Indonesia’s SOEs are empowered to serve the public interest more effectively.
Danantara represents a bold step forward in Indonesia’s approach to state-owned enterprises. As a strategic holding company consolidating key national assets, it is designed to enhance efficiency, boost global competitiveness, and ensure financial sustainability. By streamlining management and reducing bureaucratic inertia, Danantara is expected to drive stronger performance and attract investment, allowing Indonesia’s SOEs to navigate an increasingly complex economic landscape with greater agility. But beyond its structural role, Danantara embodies a fundamental shift in governance philosophy—one that prioritizes strategic decision-making, innovation, and long-term value creation over the cautious, risk-averse mindset that has long hindered progress.
However, with this newfound flexibility comes the need for strict oversight. Danantara should not become a vehicle for personal enrichment or unchecked power. While the new SOE Law removes the fear of wrongful criminalization, it does not grant immunity to those who exploit their positions to benefit themselves or their families. The Corruption Eradication Commission (KPK) retains full authority to investigate and prosecute executives who misuse SOEs resources, manipulate contracts, or engage in corrupt activities. Public vigilance is necessary to ensure that Danantara upholds its mandate with integrity and transparency. This reform is not a loophole for corruption—it is a framework designed to empower competent leadership while ensuring that those who betray public trust are held fully accountable.
A Case Study: The New SOE Law vs. the Old SOE Law
Our previous experience, particularly through Dr. (Cand) Giovanni Christy, S.H., LL.M., who was part of PT ANTAM’s expert team for hire, provides first hand insight into the unintended consequences of the old SOE Law. One of the most debated cases highlighting its flaws is the controversy surrounding ANTAM’s gold refinery and certification process.
Through its Logam Mulia brand, ANTAM holds accreditation from the London Bullion Market Association (LBMA), making its certified gold highly valuable in global markets. Many companies that meet LBMA standards seek ANTAM’s certification, as the ANTAM-stamped gold commands a significantly higher price in both domestic and international markets.
Under the previous SOE Law and the Anti-Corruption Law’s ex-post liability paradigm, ANTAM was indicted for selling its certification stamp at a price deemed too low given the substantial value increase of the gold upon receiving the ANTAM stamp. The indictment claimed that the undervaluation of the gold stamp constituted a 3.3 trillion IDR loss to the state. However, it did not consider that this financial loss was merely hypothetical, or merely a potential loss, based on the assumption that ANTAM could have charged more, rather than an actual misappropriation of funds. This case exemplifies how the old SOE Law allowed for the criminalization of business executives based on perceived or potential losses, rather than clear intent to defraud the state.
This indictment overlooked the economic realities of gold refining and certification. The refining and stamping business is capital-intensive, requiring substantial investment, and ANTAM alone does not have the capacity to meet annual gold demand. Globally, it is common practice for major refineries to partner with affiliated companies to meet industry demand, with certification fees typically treated as standard operational costs rather than profit-maximizing mechanisms. Additionally, strict quotas on gold production in Indonesia mean that without such partnerships, domestic gold sales could suffer.
The new ex-ante paradigm of the SOE Law seeks to prevent such misjudgments by ensuring that executives are not prosecuted solely on the basis of potential financial loss. Instead, liability is assessed based on intent, due diligence, and adherence to corporate governance principles. While corruption remains punishable, the law prevents executives from being unfairly prosecuted for making business decisions that may have seemed suboptimal but were reasonable at the time.
This case highlights how the old SOE Law discouraged decision-making out of fear of prosecution, leading to risk-averse behavior and inefficiencies in SOEs. By clarifying legal boundaries and focusing on actual wrongdoing rather than hypothetical losses, the new law aims to create a more balanced approach that fosters both accountability and innovation.
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