GR 38/2026 sets personal liability standards, Cut Loss rules and supervisory powers for Indonesia’s state-owned enterprises

At a Glance

Government Regulation No. 38 of 2026 on SOE Management has applied since 21 August 2026. It implements the SOE Law as last amended by Law No. 16 of 2025 and replaces GR 45/2005, as amended by GR 23/2022, and parts of GR 43/2005. The regulation covers both Persero and Perum, and sets clearer rules on ownership roles, board decision making and personal accountability.

Background

The 2025 amendments to the SOE Law rewrote the legal foundation of Indonesian SOEs on three points. The Ministry of SOEs was dissolved and replaced by BP BUMN, which acts as regulator and holds the State’s 1% Series A Dwiwarna share. The remaining 99% Series B shares are held through BPI Danantara. Article 4B of the SOE Law, as amended, provides that SOE capital and assets belong to the SOE as a legal entity, and that any SOE profit or loss, including loss from investment or operational activities, is the SOE’s own and is not a profit or loss of the State.

The ownership rule is the game changer. Once SOE loss is no longer characterised as State loss, a director’s exposure turns on the corporate law question of fault, evidenced by the decision record, in place of the public finance question of whether State money was lost.

GR 38/2026 is the implementing regulation for this new architecture. It replaces GR 45/2005 and sets out, at government regulation level, the conditions for personal liability of directors and commissioners, the procedure and protection for Cut Loss decisions, and BP BUMN’s risk based supervisory powers. It does not amend the State Finance Law, which still counts State capital separated into State enterprises as part of State finances. The relationship between those two statutes is the central legal issue for boards.

Key Provisions

A director is personally liable for losses caused by fault or negligence, but is protected if they can prove four conditions: no fault or negligence, good faith and prudence, no direct or indirect conflict of interest, and action taken to prevent the loss from arising or continuing. Commissioners and Supervisory Board members face a parallel test. Board decisions must be taken in meetings or by unanimous circular resolution, with minutes recording any dissent. SOEs may take Cut Loss measures where documented analysis shows a greater loss if no action is taken and an independent consultant or competent government institution has assessed the decision. Decision makers are protected only if they acted without fault, in good faith, without conflict of interest and without personal gain. BP BUMN supervises compliance on a risk basis, through on-site inspection and periodic reporting.

Practical Implications

The regulation puts the burden of proof on the individual. A director who wants the statutory protection must prove all four conditions set out above. Evidence that did not exist when the decision was taken cannot be created later. Evidence that did exist, however, is often scattered across emails, working files and the people involved, and is only useful if it can be produced when the decision is examined. SOEs should therefore update conflict of interest declarations, tighten minute taking including recorded dissent, require working papers for material decisions, and align articles of association and authority matrices with the new shareholder structure. Conflict management, decision records, Cut Loss procedures and supervisory follow-up form one compliance system and should be designed together.

Two further layers of complexity require legal analysis before a board relies on the new protections.

First, the State Finance Law has not changed. Article 2 letter g of Law No. 17 of 2003 still defines State finances to include State assets separated into state-owned and regionally owned enterprises. GR 38/2026 itself preserves that language: its opening provisions describe SOE management as part of the Government’s power over State finances and refer to separated State assets in SOEs. Its Elucidation, in the same regulation, adopts the Article 4B position that SOE loss is not State loss. Whether the SOE Law’s new ownership rule displaces the State Finance Law’s definition is an open question of statutory interpretation. The regulation does not resolve it. Auditors, investigators and courts will, and each may read the two statutes differently.

Second, the protection is conditional and procedural. Cut Loss protection depends on an independent assessment and documented analysis. Director protection depends on evidence of process. The technical standards for procurement, Cut Loss, reporting and board qualifications are delegated to BP BUMN implementing regulations. A board that treats GR 38/2026 as a safe harbour without mapping each decision against these requirements, and against the unchanged State finance and anti-corruption framework, may find the protection unavailable at the moment it is needed.

The practical question for any board is whether a given decision would survive this test if examined after a loss. That examination can be done in advance. For decisions not yet taken, boards should have them reviewed against the regulation’s liability conditions while the record can still be built. For decisions already taken, the supporting record often exists but is fragmented across divisions, advisers and individual files. Consolidating and indexing that contemporaneous record against each liability condition, and identifying any gaps, gives directors a defensible position before an audit or investigation begins rather than during one.