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View all search resultsIndonesian paradox: When business strategy becomes a crime
The jail sentence for former ASDP Ferry Indonesia CEO is a warning siren for anyone hoping Indonesia’s state-owned enterprises (BUMN) might someday behave like Singapore’s Temasek or France’s EDF.
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State-owned ferry operator ASDP Indonesia Ferry CEO Ira Puspadewi speaks to the press on Feb. 6, 2020.
(JP/Riza Roidila Mufti)
B
y the standards of any classical business school textbook, a state-owned ferry operator acquiring a rival, boosting market share by nearly half, positioning itself to become the world’s largest ferry company and turning in handsome profits is the sort of achievement that earns executives stock options, not prison time. Yet, here we are.
On Nov. 20, the Jakarta Corruption Court convicted former ASDP Indonesia Ferry president director Ira Puspadewi and two of her colleagues for their role in acquiring PT Jembatan Nusantara. Prosecutors argued the rival company was worth far less than the Rp 2.15 trillion (US$130 million) ASDP paid.
Whether this was a shrewd strategic move or the crime of the decade depends on whom one asks: Prosecutors see a state loss of Rp 1.25 trillion, defenders speak of a strategic masterstroke with no personal enrichment. The judges largely sided with the prosecution, handing down multi-year prison sentences.
The case is many things: legally complex, politically charged and institutionally revealing. But above all, it is a warning siren for anyone hoping Indonesia’s state-owned enterprises (BUMN) might someday behave like Singapore’s Temasek or France’s EDF: entrepreneurial, competitive and capable of playing on the world stage. The message is blunt: take a bold strategic risk, and you may end up justifying it from the defendant’s chair rather than the boardroom table.
In the classical canon of strategy, from Porter and Chandler to Mintzberg and Kaplan-Norton, the good strategist is one who creates value, outmaneuvers competitors and allocates resources to serve long-term advantage. But under the shadow of the ASDP case, the new playbook reads differently: Before projecting market share, one must first project the likelihood of prosecution.
We must recognize that this transformation is subtle but deadly. Instead of pursuing acquisitions, transformation or calculated risks, state executives will now gravitate toward activities that look unimpeachably safe: routine operations, incremental improvements and processes that generate mountains of documentation but little dynamism. Indonesia’s SOEs, already notorious for bureaucratic inertia, may now embrace a new form of strategic minimalism: “Don’t do anything bold, it’s safer.”
Consequently, a perverse outcome emerges: the evolution of what can only be called forensic strategy, decision-making designed not for business excellence, but for potential future litigation. Under this model, every strategic initiative must be accompanied by documentation and a governance process thick enough to stop a bullet.
