Prabowo Subianto Rescinds $197 Million Waskita Karya Funding

Jakarta, Indonesia – President prabowo Subianto has revoked a planned IDR 3 trillion (approximately $197 million USD) National Capital Participation (PMN) for PT Waskita Karya (Persero) Tbk, a state-owned construction company. the decision, formalized in Government Regulation (PP) Number 20 of 2025, effectively reverses a prior commitment made to bolster Waskita Karya’s capital structure.

The regulation, signed into law on May 6, 2025, rescinds Government Regulation Number 34 of 2022, which initially authorized the capital injection.This move signals a potential shift in the Indonesian government’s approach to infrastructure development, favoring private sector involvement over direct state funding for certain projects.

Background of the Revoked Funding

The now-canceled IDR 3 trillion PMN was originally allocated by former President Joko Widodo (Jokowi) with the intention of strengthening Waskita Karya’s financial position and enhancing its capacity to complete National Strategic Projects (PSN), notably in the toll road sector.The funds were to be drawn from the 2022 state Budget (APBN). Though,the plan was ultimately scrapped,and the funds were slated to be returned to the state treasury.

Did You Know? Waskita Karya was heavily involved in the construction of several sections of the Trans-Java toll road, a major infrastructure project aimed at improving connectivity across the island of Java.

Waskita Karya’s Viewpoint

In 2023, Waskita karya’s President Director, Mursyid, disclosed that the Privatization committee had approved the return of the 2022 PMN funds to the State General Cash Account.This decision effectively halted the company’s planned rights issue and privatization process, according to information released to the Indonesia Stock Exchange (BEI).

Shift to Hutama Karya

Following the decision to retract the PMN from Waskita Karya, State-owned Enterprises (BUMN) Minister Erick Thohir redirected the funds to PT Hutama Karya (Persero). The intended purpose of this reallocation was to enable Hutama Karya to acquire assets from Waskita Karya as part of a broader restructuring effort.

Prabowo’s Stance on State Capital Participation

President Prabowo Subianto has expressed reservations about the effectiveness of state capital participation, particularly in the construction sector. He voiced his concerns at the International Conference on Infrastructure (ICI) 2025 in Jakarta, emphasizing his belief that the private sector is frequently enough more efficient and capable in handling infrastructure projects.

“I believe in the strong role of the state for intervention overcoming poverty, hunger, improved education… but I also know that in certain fields, especially physical development construction, the private sector is often more modern, efficient, and on time by saving a large budget,” Prabowo stated at the conference The Jakarta Post reported.

Prabowo criticized the perceived inefficiencies of state-owned enterprises, suggesting that they sometimes operate without a strong sense of urgency due to the expectation of continued financial support from the government.

Pro Tip: monitoring government regulations and policy shifts is crucial for understanding the future direction of infrastructure development in Indonesia.

Potential Implications

The revocation of funding for Waskita Karya and President Prabowo’s statements suggest a potential shift towards greater private sector involvement in Indonesian infrastructure projects. this could lead to increased opportunities for private companies, both domestic and international, to participate in the country’s ongoing development initiatives. However, it also raises questions about the future role of state-owned enterprises in the sector.

What impact will this decision have on ongoing infrastructure projects? How will it affect the competitive landscape within the construction industry?

Share your thoughts: How do you think this policy shift will affect Indonesia’s infrastructure development? Subscribe to our newsletter for more updates on global economic trends.