Indonesia to Merge 23 State-Owned Industrial Estate Firms

Indonesia plans to merge 23 state-owned industrial estate operators into one entity, bringing a combined 35,000 hectares of land under a single corporate structure. Danantara Indonesia chief operating officer Dony Oskaria announced the plan at the Investor Daily Summit in Jakarta on Oct. 8.

The consolidation is part of a broad review of state-owned enterprises (SOEs) led by Danantara, Indonesia’s sovereign wealth fund. The aim is to streamline overlapping businesses and improve efficiency, while creating a larger industrial estate operator that Danantara says can help strengthen competitiveness and attract investment.

For manufacturers and other investors, the plan could mean a more integrated point of entry to industrial land. Danantara has not announced when the merger will be completed, and Oskaria did not specify how the combined business would be structured or managed.

Why combine the operators?

Danantara’s review has identified overlapping operations and inefficient corporate structures across state-owned businesses. Oskaria said the assessment considers each company’s business model, revenues and costs, profit margins, market conditions, financial strength and organisational capabilities. Those findings will guide decisions on which companies to retain, merge, sell or liquidate.

The industrial estate merger is also intended to support Indonesia’s push to develop a larger industrial base. Oskaria said industrial development could create jobs, expand the tax base and support more sustainable growth. The government is seeking to accelerate industrialisation through deregulation and downstream processing of minerals, mining commodities and agricultural products.

Part of a wider SOE overhaul

Danantara has mapped 1,074 SOE companies and subsidiaries and aims to reduce the portfolio to about 200 stronger core businesses by the end of 2026. Oskaria also said the fund would consolidate 16 insurance companies, 60 hospitals and more than 100 hotels.

Danantara separates SOE management from investment operations. Its asset-management arm oversees and consolidates the state-owned portfolio, while its investment-management arm receives dividends generated by those businesses. Oskaria said the companies and their physical assets are not transferred to the investment arm, and that SOE assets are not pledged as collateral for its investments.

This report draws on information from Jakarta Globe.