Danantara unveils sweeping reforms for SOE pay
JAKARTA: State asset fund Danantara has announced a major overhaul of bonus and compensation rules for state-owned enterprises (SOE) directors and commissioners, aligning rewards with global standards of corporate governance.
Under the new rules, directors' incentives will be strictly tied to measurable operational outcomes and financial performance, based on audited statements that reflect actual business conditions.
Meanwhile, commissioners will no longer be eligible for performance-based bonuses, in line with international best practices that advocate for fixed compensation to ensure their independent oversight role.
'This restructuring represents a comprehensive overhaul of the government's incentive system,' Danantara chief executive officer Rosan Roeslani said in a statement issued last Friday.
'We want to ensure that every reward, especially for the board of commissioners, is aligned with its contribution and actual impact on the governance of the SOE concerned,' Rosan said.
The policy draws from global benchmarks, including the Organisation for Economic Co-operation and Development Guidelines on Corporate Governance of State-Owned Enterprises, which advocate for fixed remuneration for supervisory roles to ensure impartiality and accountability.
The reform is seen as a bold move to reset the governance within Indonesia's SOEs and signals a broader shift in public sector compensation strategies.
The policy, detailed in an official letter, will take effect this year and apply to all SOEs within Danantara's portfolio.
The move is part of a broader structural reform agenda aimed at creating a more transparent, accountable and efficient SOE ecosystem that prioritises public interest over personal gain.
Danantara said the reform does not amount to a reduction in remuneration, but 'a realignment'.
Commissioners will continue to receive a fixed monthly income reflective of their roles and responsibilities.
However, the elimination of variable, profit-based compensation is intended to reinforce their independence and supervisory integrity.
'This is not about cutting pay. It's about making it appropriate,' Rosan said.
'Commissioners will still be compensated fairly, but without the distortions of performance-based incentives that can compromise oversight.'
The reform comes amid heightened scrutiny over SOE governance practices following a wave of controversial political appointments.
With 30 of 56 deputy ministers now holding commissioner posts in major SOEs, critics argue that governance is increasingly driven by political patronage.
These include recent appointments of Second Deputy Higher Education, Science and Technology Minister Stella Christie to Pertamina Hulu Energi and former athlete Taufik Hidayat to PLN Energi Primer Indonesia.
Political observers and anti-corruption experts have flagged these dual roles as conflicts of interest.
'It shows weak commitment to anti corruption efforts,' Indonesia Corruption Watch's Yassar Aulia said on July 13. — The Jakarta Post/ANN
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Danantara unveils sweeping reforms for SOE pay
FILE PHOTO: A sign for Indonesia's sovereign wealth fund Danantara is seen in front of its headquarters in Jakarta, Indonesia, February 28, 2025. REUTERS/Willy Kurniawan/File Photo JAKARTA: State asset fund Danantara has announced a major overhaul of bonus and compensation rules for state-owned enterprises (SOE) directors and commissioners, aligning rewards with global standards of corporate governance. Under the new rules, directors' incentives will be strictly tied to measurable operational outcomes and financial performance, based on audited statements that reflect actual business conditions. Meanwhile, commissioners will no longer be eligible for performance-based bonuses, in line with international best practices that advocate for fixed compensation to ensure their independent oversight role. 'This restructuring represents a comprehensive overhaul of the government's incentive system,' Danantara chief executive officer Rosan Roeslani said in a statement issued last Friday. 'We want to ensure that every reward, especially for the board of commissioners, is aligned with its contribution and actual impact on the governance of the SOE concerned,' Rosan said. The policy draws from global benchmarks, including the Organisation for Economic Co-operation and Development Guidelines on Corporate Governance of State-Owned Enterprises, which advocate for fixed remuneration for supervisory roles to ensure impartiality and accountability. The reform is seen as a bold move to reset the governance within Indonesia's SOEs and signals a broader shift in public sector compensation strategies. The policy, detailed in an official letter, will take effect this year and apply to all SOEs within Danantara's portfolio. The move is part of a broader structural reform agenda aimed at creating a more transparent, accountable and efficient SOE ecosystem that prioritises public interest over personal gain. Danantara said the reform does not amount to a reduction in remuneration, but 'a realignment'. Commissioners will continue to receive a fixed monthly income reflective of their roles and responsibilities. However, the elimination of variable, profit-based compensation is intended to reinforce their independence and supervisory integrity. 'This is not about cutting pay. It's about making it appropriate,' Rosan said. 'Commissioners will still be compensated fairly, but without the distortions of performance-based incentives that can compromise oversight.' The reform comes amid heightened scrutiny over SOE governance practices following a wave of controversial political appointments. With 30 of 56 deputy ministers now holding commissioner posts in major SOEs, critics argue that governance is increasingly driven by political patronage. These include recent appointments of Second Deputy Higher Education, Science and Technology Minister Stella Christie to Pertamina Hulu Energi and former athlete Taufik Hidayat to PLN Energi Primer Indonesia. Political observers and anti-corruption experts have flagged these dual roles as conflicts of interest. 'It shows weak commitment to anti corruption efforts,' Indonesia Corruption Watch's Yassar Aulia said on July 13. — The Jakarta Post/ANN
