Identity and Role of State-Owned Enterprises for the People’s Welfare Based on Article 33 of the Indonesian Constitution

Abstract

The nature of the establishment of SOEs in Indonesia is derived from the formulation of Article 33 of the 1945 Constitution. Article 33 of the 1945 Constitution provides direction, intent and purpose for the state to control important production branches and to control the livelihoods of many people through state-owned enterprises (SOEs). The dynamics of politics, economy, and the era of globalization pushed changes in the management of SOEs. It is important to always look back at the background of the formation and identity of the actual SOEs so that the management and control of SOEs by the state remains in the corridor of Article 33 of the 1945 Constitution. This paper discusses the background of SOE formation that was influenced by ideological, economic and historical reasons. The development of SOEs from time to time shows that the influence of economic and political policies of the authorities is more dominant in influencing the management of SOEs. The identity and role of SOEs as agents of development, with business and social dimensions, demand that SOEs must be able to survive in the era of globalization amid demands from the state, society and the market. Faced with this, the government needs to separate explicitly between the actions of the state (government and the House of Representatives) and corporate actions (SOEs) so that management of SOEs can run professionally and be able to realize the objectives of the state.