The governance of state-owned enterprises in Indonesia faced a moment of internal friction in late 2015 when then-Minister of Energy and Mineral Resources (ESDM), Sudirman Said, voiced public discontent regarding the appointment of four new board of directors members at Indonesia’s state electricity monopoly, PT PLN (Persero). Speaking from the State Palace in Jakarta on Wednesday, November 4, 2015, Sudirman revealed that the state-owned utility had proceeded with the inductions without waiting for the imminent installation of a new President Commissioner (Komisaris Utama).
The incident cast a spotlight on the intricate coordination dynamics, jurisdictional overlaps, and communication protocols between the Ministry of Energy and Mineral Resources, the Ministry of State-Owned Enterprises (SOEs), and the corporate governance boards of major state monopolies. While acknowledging that no explicit legal violations had occurred, Sudirman emphasized that the move defied administrative etiquette, creating an avoidable perception of haste and poor inter-agency synchronization.
Background Context on SOE Governance and Ministerial Oversight
To understand the weight of Sudirman Said’s remarks, one must examine the complex regulatory framework governing Indonesian state-owned enterprises (Badan Usaha Milik Negara, or BUMN). At the time, the stewardship of strategic national assets like PLN involved a dual-tier governance structure comprising the Board of Directors (Direksi), responsible for day-to-day operations, and the Board of Commissioners (Dewan Komisaris), tasked with supervisory and advisory duties.
Ministerial oversight of PLN was shared—often contentiously—between the Ministry of SOEs, led at the time by Rini Soemarno, and the Ministry of Energy and Mineral Resources, which held jurisdiction over the strategic, technical, and regulatory policies of the energy sector. While the Ministry of SOEs held the ultimate shareholder authority regarding appointments and corporate restructuring, the Ministry of ESDM maintained a critical interest in the operational leadership of PLN due to its mandate over national electrification, power tariff policies, and strategic energy infrastructure projects.
The appointment of executive board members within a utility of PLN’s scale—which supplies electricity to tens of millions of customers across the archipelago and manages multi-billion-dollar infrastructure projects—typically demands rigorous alignment among stakeholders. The absence of a newly designated President Commissioner at the time of the directorate appointments meant that crucial supervisory inputs and consensus-building mechanisms were bypassed, setting off a minor political and administrative controversy.
Chronology of Events Leading to the Controversy
The sequence of events leading up to Sudirman Said’s public statement unfolded over several weeks in October and November 2015, marked by shifting leadership dynamics within Indonesia’s energy sector.
Early October 2015: Discussions concerning corporate restructuring and executive refreshes at PT PLN (Persero) intensified as the state utility faced mounting pressure to accelerate the government’s ambitious 35,000-megawatt power plant procurement program.
Mid-to-Late October 2015: Preparations for structural changes within the PLN board gained momentum. Simultaneously, executive search and vetting procedures were underway within the Ministry of SOEs to finalize the selection of a new President Commissioner to head the utility’s supervisory board.
November 4, 2015: PT PLN (Persero) officially swore in four new members to its Board of Directors. The ceremony proceeded without waiting for the formal installation of the incoming President Commissioner, whose appointment was already widely known within bureaucratic circles to be imminent.
Later on November 4, 2015: Speaking to reporters at the State Palace following a cabinet engagement, Minister Sudirman Said publicly addressed the matter. He expressed surprise at the speed of the induction, stating that while the utility was not strictly legally bound to delay executive appointments until a new commissioner assumed office, administrative customs and good corporate governance dictated otherwise. He noted his intention to seek clarification from Minister of SOEs Rini Soemarno regarding the background and rationale of the decision.
Administrative Etiquette Versus Legal Compliance
The crux of the disagreement centered on the tension between strict legal compliance and institutional courtesy. Under Indonesian corporate law and specific regulations governing BUMNs, operational decisions regarding executive appointments are executed under the authority of the controlling shareholder, represented by the Ministry of SOEs.
Sudirman pointed out that although existing commissioners remained on the board at the time of the induction, the impending arrival of a new President Commissioner warranted a period of consultation. According to the energy minister, standard corporate decorum requires the Chief Executive Officer (CEO/Direktur Utama) of a company to consult closely with an incoming supervisory head before finalizing high-level personnel changes.
Furthermore, Sudirman underscored that the standard procedure for proposing executive directors within a state enterprise fundamentally relies on constructive dialogue and vetting alongside the supervisory board. Bypassing this consultative phase, even if technically permissible under procedural loopholes, risked undermining internal cohesion and establishing a precedent where strategic appointments are rushed prior to leadership transitions on the supervisory board.
Reactions and Institutional Dynamics
The public airing of the "kecolongan" (caught off guard) sentiment highlighted underlying bureaucratic frictions between key ministries during the administration of President Joko Widodo. While the administration frequently emphasized cabinet solidarity and streamlined governance, policy execution across overlapping jurisdictions occasionally exposed divergent approaches to state enterprise management.
Minister of SOEs Rini Soemarno, whose ministry held direct administrative authority over the corporate actions of PLN, did not immediately issue a detailed public counter-statement on the day of Sudirman’s remarks. Observers noted that the appointment process fell squarely within the purview of the SOE Ministry’s prerogative to ensure operational agility. However, the lack of advance notice or informal alignment with the Ministry of ESDM—which bore the responsibility for the broader success of national energy policies—demonstrated systemic gaps in inter-ministerial communication.
Industry analysts and governance watchdogs weighed in on the episode, noting that strategic alignment between the Ministry of ESDM and the Ministry of SOEs was paramount. At the time, PLN was tasked with executing the monumental 35,000 MW electrification program, a flagship infrastructure initiative of the national government. Any friction between the sector regulator (ESDM) and the corporate shareholder (SOEs) risked creating operational bottlenecks or conflicting signals for PLN’s executive leadership.
Broader Implications for State-Owned Enterprise Reform
The 2015 PLN directorship episode served as a case study in the ongoing challenges of reforming Indonesia’s vast state-owned enterprise sector. Key implications derived from the event include:
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The Need for Integrated Human Capital Governance in BUMNs
The incident underscored the necessity of harmonizing how executive talent is selected, vetted, and appointed within strategic monopolies. When multiple ministries hold stakes in the outcomes of an SOE—such as energy security versus financial asset management—structured coordination protocols become indispensable. -
Managing Bureaucratic Transparency and Communication
Public disagreements among high-ranking ministers can project uncertainty to investors, creditors, and international partners involved in large-scale infrastructure financing. The episode prompted internal calls within the Indonesian bureaucracy for improved pre-consultation frameworks to resolve administrative nuances behind closed doors rather than through media statements. -
Strengthening Supervisory Board Efficacy
The debate highlighted the vital role of the Board of Commissioners as a bridge between shareholders and executive management. Ensuring that new directors take office in tandem with, or with the full endorsement of, a fully constituted supervisory board reinforces checks and balances within state enterprises.
Conclusion
While the induction of the four new PLN directors proceeded without formal legal interruption in November 2015, Sudirman Said’s critique left an enduring mark on the discourse surrounding bureaucratic synergy in Indonesia. By spotlighting the departure from standard administrative customs, the episode catalyzed broader reflections on how executive appointments in critical national utilities should be managed. Ultimately, the incident reinforced the principle that for state-owned enterprises charged with driving national development, seamless coordination between regulatory bodies and shareholder ministries is just as vital as legal compliance.
