Introduction

On October 7, 2025, the Government issued Presidential Regulation of the Republic of Indonesia Number 105 of 2025 on the State-Owned Enterprises Regulatory Agency ("Regulation 105/2025"). Through Regulation 105/2025, the Government restructures the institutional framework for State-Owned Enterprises (“SOE”) governance by replacing the Ministry of State-Owned Enterprises with the State-Owned Enterprises Regulatory Agency (Badan Pengaturan Badan Usaha Milik Negara/“BP BUMN”), which exercises regulatory authority and reports directly to the President.

Regulation 105/2025 implements Law Number 16 of 2025 on the Fourth Amendment to Law Number 19 of 2003 on State-Owned Enterprises (“SOE Law”). Under this framework, the Government establishes a dedicated regulatory body to separate SOE regulatory oversight from day-to-day corporate management. This approach aims to encourage more professional and responsive SOE management, with an emphasis on business performance and public service.

Comparison

Regulation 105/2025 repeals and replaces Presidential Regulation Number 179 of 2024 on the Ministry of State-Owned Enterprises ("Regulation 179/2024"). This change transforms the institutional form from a ministerial body into a non-ministerial regulatory authority. The following is a comparison table between Regulation 105/2025 and Regulation 179/2024:

Key Provisions

Regulatory Authority and State Share Management

Regulation 105/2025 grants regulatory authority to BP BUMN. Article 4 stipulates that BP BUMN is authorized to formulate technical policies and manage dividends as well as special rights attached to Series A Dwiwarna shares. In this capacity, the State-Owned Enterprises Regulatory Agency exercises authority in the General Meeting of Shareholders of strategic SOEs, including regarding the appointment and dismissal of the board of directors and commissioners, with the approval of the President.

Leadership Flexibility from Professionals (Non-Civil Servants)

Regulation 105/2025 governs that the Head and Deputy Head of the State-Owned Enterprises Regulatory Agency are appointed and dismissed by the President and may be appointed from non-civil servant backgrounds, as stipulated in Article 49 paragraph (1) juncto Article 51. This provision allows for the filling of leadership positions from professionals outside the state civil apparatus, including practitioners from the business and financial sectors.

Fixed Term Tenure

The tenure of the leadership of the State-Owned Enterprises Regulatory Agency is determined for one period of 5 (five) years and may be extended for one subsequent period, as stipulated in Article 50 paragraph (1). This regulation provides certainty regarding the leadership period and supports policy continuity in SOE management.

Formation of Expert Group

Article 36 governs that the Head of BP BUMN may form an Expert Group consisting of a maximum of 7 (seven) persons. The Expert Group provides considerations to the Head of BP BUMN in formulating policies and strategies for SOE management. Members of the Expert Group receive financial rights equivalent to Echelon I.b officials.

Transitional Provisions

The transitional provisions govern the transfer of duties and functions from the Ministry of State-Owned Enterprises to the State-Owned Enterprises Regulatory Agency. Article 60 stipulates that the duties and functions previously carried out by the Ministry of State-Owned Enterprises shall be assumed by BP BUMN as of the effective date of this regulation. Article 61 (3) sets a maximum period of 6 (six) months for the transfer of employees, equipment, funding, and documents. During this period, Article 62 governs that the 2025 work program shall continue to be implemented using available resources. Furthermore, Article 65 states that references to the Minister of State-Owned Enterprises in existing contracts or agreements shall be construed as the Head of the State-Owned Enterprises Regulatory Agency.

Closing

Regulation 105/2025 changes the institutional arrangement for SOE management from a ministry form to a regulatory agency. Regulation 105/2025 separates the regulatory function from corporate management, including through the filling of leadership positions which may be appointed from non-civil servant backgrounds as well as the determination of leadership tenure with a fixed term. For business stakeholders and investors, Regulation 105/2025 provides greater clarity regarding authority structures and decision-making mechanisms. SOE Boards of Directors need to adjust their reporting frameworks and understand the supervisory mechanisms applicable under the new institutional structure.