Indonesian President Prabowo Subianto has allowed foreigners to manage state-owned enterprises (BUMN) for the first time in the country's history. The new policy sparked a strong reaction – immediately after the announcement, the president was accused of violating the constitution.
Prabowo announced the reform on October 15, 2025, at the Forbes Global CEO Conference in Jakarta.
“I have changed the rules. Now expats, who are not Indonesian citizens, can lead our state enterprises. I am very happy about this,” the president said.
According to him, the goal of the innovation is to increase the competitiveness of state companies and bring their management system up to international standards.
At the same time, Prabowo instructed the sovereign fund Danantara (the country's new investment agency) to seek the best specialists, regardless of citizenship.
The first company to take advantage of the new opportunity was Garuda Indonesia. At an extraordinary shareholders' meeting, two foreigners were included in the board of directors for the first time. Balagopal Kunduwara (a Singaporean citizen) took the position of director of finance and risk management, while Neil Raymond Mills (a British citizen) became the director of transformation. Previously, Kunduwara was a vice president of Singapore Airlines for financial services, and Mills led transformational projects at Scandinavian Airlines and Air Italy.
The president's decision, predictably, sparked debate. Minister of State Secretariat Prasetyoh Hadi explained that the policy is not directed against local personnel.
“If Indonesians are capable of performing these tasks, of course, we will support them. But if right now we need the skills that a foreigner possesses, why not?” he said after a ministers' meeting.
Prasetyoh Hadi compared the situation to football: “If there is a good local coach, that's great, but if a foreign coach is needed, that's also fine. Sometimes we need outside impetus to grow.”
The representative of the Corruption Eradication Commission (KPK) Budi Prasetyoh clarified that the agency has the right to investigate the activities of foreign leaders of state companies if they are involved in corruption or fraud. He noted that in the case of proven violations, expats will bear full responsibility on par with other state officials.
The Attorney General's Office confirmed that foreigners working in state-owned companies are subject to Indonesian law and may be held accountable on general grounds.
However, not everyone found these arguments convincing. Constitutional law expert Herdianzah Hamzah, known as Castro in Indonesia, believes Prabowo's decision contradicts Article 33 of the 1945 constitution. According to him, only citizens of the country can manage state companies.
“If management is transferred to foreigners, the philosophy of this norm loses its meaning. This is a misunderstanding of the BUMN status, which should be fully controlled by the state,” he said.
Castro reminded that the Law № 16 of 2025 on BUMN clearly states that state company leaders must be Indonesian citizens. According to him, the new initiative undermines the concept of economic sovereignty, which Prabowo himself previously called one of the priorities.
Despite the criticism, Prabowo's administration continues to promote the reform. Additionally, the plans, according to the president, include reducing the number of state companies by almost five times – from about 1,000 to 200, to increase their efficiency and profitability.
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