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View all search resultsWhen costs crush performance: Danantara’s test for SOEs
In many SOEs, leakages persist because decisions live in gray zones: exceptions become routine, documentation becomes negotiable and accountability becomes diffuse.
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Investment Minister and CEO of state asset fund Danantara, Rosan Roeslani (left), talks with President Prabowo Subianto during a meeting at the Merdeka Palace in Central Jakarta on Dec. 17, 2025 about the progress of land acquisition for the haj village project in Mecca. The project is expected to provide better services for Indonesians going on the haj and 'umrah' (minor haj). (Courtesy of Presidential Secretariat/Kris )
T
he country’s state asset fund Danantara represents a single, testable hypothesis: Indonesia’s state-owned enterprises (SOEs) will perform better if they are compelled to behave like pure corporate enterprises. Not corporate in presentation, but corporate in discipline with clear accountability, enforceable governance and capital allocation based on returns and decisions that are auditable rather than negotiable.
The hypothesis is timely because many SOEs are not short of ambition. They simply lack operating leverage. And the biggest reason is what might be called fixed-cost gravity: a cost base so structurally heavy that it silently pulls performance down, even when revenues rise.
Fixed-cost gravity is not a metaphor. It is the practical reality of enterprises whose cost structure is dominated by fixed or semi-fixed expenses, depreciation, baseline staffing, maintenance regimes, insurance, compliance obligations and administrative overhead that accumulates through routine. When that gravity is high, the enterprise needs sustained revenue momentum simply to stay stable; it needs exceptional momentum to generate real surplus. Growth looks impressive on paper, but the conversion into margin remains thin.
This is why the most misleading sentence in many SOE transformations is “We are growing”. Growth is not the point. The point is whether growth turns into resilience, or whether the organization is simply expanding activity while costs rise in parallel. When costs climb almost as fast as revenue, the enterprise is not strengthening; it is maintaining balance.
A typical logistics service provider shows how this happens even outside the SOE context. Revenue may grow in the high-single digits year-on-year, yet operating expenses still rise in the mid-single digits because service must remain “always on”, and a large share of costs is structural.
When the operating-cost ratio sits in the high-70 percent range, most revenue is absorbed before meaningful operating surplus emerges. Under these conditions, small shocks such as fuel and maintenance spikes, wage pressures or foreign-exchange effects, can quickly remove gains. Performance becomes fragile not because management lacks plans, but because the cost base is rigid.
Danantara’s promise, if it is to be more than institutional rebranding, is that it can impose a corporate owner’s mindset that makes this rigidity governable. A true corporate enterprise does not manage performance primarily through meetings and reporting. It manages through execution integrity: the ability to reconcile what dashboards claim with what customers actually experience.
