Published: August 17, 2026

Indonesia to Close More Than 750 State-Owned Enterprises in Major Economic Overhaul

In a decisive bid to modernize Southeast Asia’s largest economy, Indonesian President Prabowo Subianto has announced a sweeping reform agenda designed to streamline public sector efficiency and attract international talent. At the heart of this strategy is an aggressive restructuring of the country's state-dominated corporate landscape, with the government planning to shut down more than 750 state-owned enterprises (SOEs). Coupled with landmark reforms to the nation's strict citizenship laws and ambitious fiscal targets for 2027, the administration is signaling a dramatic shift toward market liberalization and fiscal discipline.

Quick Facts

• SOE Rationalization: More than 750 state-owned enterprises are slated for closure to eliminate redundancies and reduce state liabilities.
• Current Progress: President Prabowo confirmed that 290 underperforming or redundant SOEs have already been closed.
• Citizenship Reform: Indonesia will introduce a "limited" dual citizenship framework to curb brain drain and attract high-skilled diaspora.
• Economic Growth Target: The government is targeting a robust 6 percent economic growth rate for 2027, maintaining the momentum projected for 2026.
• Fiscal Discipline: The national budget deficit for 2027 will be tightly capped at 2.4 percent of Gross Domestic Product (GDP).

What Happened

President Prabowo Subianto has unveiled a multi-pronged economic strategy aimed at dismantling inefficient state monopolies while aggressively courting global investment and human capital. The most striking element of this policy is the massive reduction of Indonesia's state-owned corporate sector. President Prabowo revealed that the government has targeted over 750 SOEs for dissolution. The liquidation process is already well underway, with 290 entities officially closed to date.

Alongside this corporate purge, President Prabowo announced that Indonesia will ease its long-standing prohibition on dual nationality by introducing a "limited" dual citizenship policy. To support these structural transitions, the administration has finalized its medium-term macroeconomic framework, pledging to achieve a 6 percent economic growth rate in 2027 while keeping the budget deficit at a conservative 2.4 percent of GDP.

Key Details

The consolidation of Indonesia's state sector represents a fundamental shift in how Jakarta manages public assets. Historically, Indonesian SOEs have spanned nearly every sector of the economy, often leading to market crowding and inefficiency. By targeting more than 750 entities, the government aims to strip away zombie corporations that rely on state bailouts. The 290 enterprises already closed were identified as financially unviable or redundant.

To complement this domestic streamlining, the administration is tackling its talent shortage through immigration reform. Currently, Indonesian law does not recognize dual citizenship for adults, forcing citizens who acquire foreign passports to forfeit their Indonesian nationality. The proposed "limited" dual citizenship framework is specifically designed to allow high-skilled overseas Indonesians to retain ties to their homeland, facilitating technology transfer and capital inflows.

Financially, the administration is balancing growth with stability. The 6 percent growth target for 2027 matches the outlook set for 2026, demonstrating confidence in the country's economic trajectory. This growth will be pursued under strict fiscal constraints, with a projected 2.4 percent budget deficit, safely below the country’s statutory 3 percent ceiling.

Background

For decades, Indonesia's state-owned enterprises—collectively known as *Badan Usaha Milik Negara* (BUMN)—have been criticized for bureaucratic bloat, corruption, and crowding out private enterprise. Previous administrations attempted minor consolidations, but President Prabowo’s mandate represents the most aggressive liquidation campaign in the nation's modern history.

Simultaneously, Indonesia has suffered from a persistent "brain drain," losing thousands of highly educated professionals annually to hubs like Singapore, the United States, and Europe due to the rigid single-citizenship law. By addressing both the inefficiency of state firms and the rigidities of nationality laws, the current administration seeks to remove structural bottlenecks that have historically capped Indonesia's economic potential.

Why It Matters

This comprehensive reform package is a clear signal to international markets and credit rating agencies that Indonesia is committed to fiscal sustainability and market competitiveness. Shutting down hundreds of state enterprises will free up public funds, reduce systemic risks to the state budget, and open up vital sectors of the economy to private competition.

Furthermore, the introduction of limited dual citizenship could prove revolutionary for Indonesia’s technology, research, and financial sectors. By making it easier for the wealthy and highly educated diaspora to invest and work in Indonesia without legal hurdles, Jakarta is positioning itself as a more attractive regional hub. Achieving 6 percent growth under a disciplined 2.4 percent deficit will also bolster investor confidence, proving that the administration can expand the economy without relying on excessive debt.

What Happens Next

The implementation of these policies will require significant legislative and administrative coordination. The Ministry of State-Owned Enterprises is expected to accelerate the liquidation of the remaining 460-plus targeted entities over the coming months, a process that will involve asset sales, debt restructuring, and labor reallocations.

On the legislative front, the Indonesian parliament must draft and debate amendments to the existing citizenship laws to formalize the "limited" dual nationality status. Meanwhile, economists and international observers will closely monitor the draft budgets for 2026 and 2027 to ensure that the government's spending aligns with the self-imposed 2.4 percent deficit cap amid these sweeping structural changes.

Ultimately, President Prabowo's ambitious reforms represent a high-stakes gamble to elevate Indonesia into the ranks of high-income economies. If successful, the reduction of state intervention, combined with a newly mobilized global diaspora, could unlock unprecedented