State-Owned Enterprises in Indonesia: Are Profits Important?

According to Leigh McKiernon in a blog, profits take a backseat for State-Owned Enterprises (SOEs) in Indonesia. Unlike their capitalist cousins, SOEs don’t waste their energy on objectives like shareholder value or profitability. Such pursuits are for mere mortals. Here, the goal is loftier: making the powers-that-be appear as the saviours of the nation.

It’s a theatrical production of epic proportions. Imagine governance colliding with the artistry of wayang kulit, where CEOs aren’t leaders but puppets, dancing to the rhythm of political masters. Politicians whose true performance metrics lie not in fiscal prudence but in the effusive applause of their social media followers. 

 

Source: https://en.wikipedia.org

To grasp the mystique of Indonesian SOEs, you must first abandon the quaint, colonial-era notion that businesses exist to generate profit. That’s the kind of capitalist propaganda you’d expect from people who still think ROI matters. Here, profitability isn’t just a secondary concern—it’s barely on the syllabus. For an Indonesian SOE, profit is like a decorative fruit bowl: nice to look at, but hardly integral to the feast.

What truly matters is alignment with the grand narrative. These enterprises aren’t judged on trivialities like efficiency or solvency. Is the SOE orchestrating a massive infrastructure project in time for election season? Marvelous. Is it creating jobs that look good on PowerPoint slides, even if those jobs involve six people supervising one shovel? Perfect. And if these initiatives rack up losses large enough to make a Big Four auditor break into a cold sweat? Well, that’s just a necessary sacrifice on the altar of prestasi.

If you think CEOs of SOEs in Indonesia are chosen for their visionary leadership or business acumen, think again. Forget meritocracy. The selection process here is more nuanced, a delicate balance of political connections, unwavering loyalty, and the rare gift of looking serene in the face of financial catastrophe.

Once installed, these CEOs aren’t bogged down by pedestrian goals like increasing revenue or trimming inefficiencies. No, their primary mission is far more important: ensuring that the ministry’s reputation shines like a freshly polished keris. The company’s survival? A secondary concern, at best. After all, if the enterprise falters, there’s always another bailout waiting around the corner.

Despite their well-documented inefficiencies, persistent losses, and occasional flirtations with outright chaos, SOEs in Indonesia excel in one area: public relations. Where some see failure, these organizations see opportunity. Where others see calamity, they craft a feel-good narrative. Every catastrophe is a “learning experience,” every misstep a “building block,” and every fiasco a mere “temporary glitch” on the sacred path to national greatness.

The genius here isn’t just in spin—it’s in the absolute commitment to spin. Public relations aren’t a side hustle; it’s their raison d'être. The business model may resemble a poorly built sandcastle enduring a typhoon, but if the narrative is intact, who’s keeping score?

In the end, the story sells. And in this game, perception isn’t just reality—it’s the only reality that matters. So, what if the company’s finances are in freefall? If the hashtags are trending, the mission is accomplished.

In Malaysia, are we trending towards that?

Reference:

State-Owned Enterprises in Indonesia: Where Profits Take a Backseat to Publicity, Leigh, McKiernon, www.linkedin.com, 4 December 2024