Danantara Points to Lack of Focus, Diversification as Root of BUMN underperformance
Jakarta, indonesia - Danantara Asset Management (DAM) has identified a lack of strategic focus and excessive diversification as key factors hindering the performance of Indonesian State-Owned Enterprises (BUMN), according to recent statements. The company plans a sweeping portfolio streamlining effort aimed at refocusing BUMN on core, profitable businesses.
Speaking recently, Febriany, a representative of Danantara, stated, “There are so many children, all kinds of diversification here and there.” This observation underscores the company’s assessment that BUMN have spread themselves too thin, diluting resources and hindering profitability.
To address this,DAM will lead a portfolio streamlining initiative,prioritizing core businesses and evaluating the viability of others. “Later, there will also be a special team at DAM that will streamline it so that it focuses on what needs to be focused on,” febriany explained. “For those who are not part of the ecosystem that is needed, maybe we should ask, is there a loss if they lose, they don’t need to be there, rather than being a burden. But if they make a profit, share it like that.”
This strategy aligns with priorities outlined in a recent working meeting with Commission VI DPR RI on July 23rd. Danantara Chief Operating Officer (COO) Dony Oskaria detailed a thorough list of consolidation and streamlining programs for 2024, including:
* Consolidation of the construction sector
* Consolidation and streamlining of the fertilizer business
* Consolidation of the hospital business
* consolidation of the hotel business
* Consolidation of the sugar business
* Consolidation and downstreaming of the oil business
* Consolidation of the insurance business
* Asset management business consolidation
* Industrial area business consolidation
Beyond consolidation, DAM is also pursuing business progress in several key sectors, including cooperatives, food, the battery industry, cement, sharia banking, telecommunications, and shipbuilding, with a goal of completion within the next five months.
To support these initiatives, Danantara is finalizing internal governance and policies related to capital, finance, risk management, law, and human resources. “To support these 21 programs, we will also complete the business support governance in the Danantara Asset Management organization through the human capital procedure policy… Then we will also complete procedures in the financial sector, in the field of risk management and legal to support Danantara asset management operations,” Oskaria stated.
The move signals a critically important shift in strategy for Indonesian BUMN, aiming to improve efficiency and profitability by concentrating on core competencies and shedding underperforming or non-strategic assets.
(acd/acd)
