New Changes of Appointment and Dismissal of State – Owned Company Directorship

New Regulation Regulation of the Minister of State-Owned Enterprises of the Republic of Indonesia Number Per – 11/MBU/07/2021

Concerning Requirements, Procedures for Appointment, and Dismissal of Members of the Board of Directors of State-Owned Enterprises revokes the old regulation concerning same matter

The new regulation institutes new ways in process selection of top executives for Indonesia’s state enterprises aims to improve quality and accountability in processing selection of new appointee of directorship. This changes also changes the talent management as following:

1. Talent management
Talent management is a system implemented for management and development in selecting State Owned Enterprises (hereinafter called “ SOE”) Directors. It lays out stages and procedures carried out through  screening, selection, assessment, classification, development and mobility.
a. Talent Sources
Potential candidates directors may come from Prospective Ministry candidates, Prospective SOE or external prospective candidates.

b. Here are the stages and mechanism in talent management process:

1. Selection
Candidates from SOE Ministry’s scopes comprises echelon I, II and III officials  or functional official equivalent level echelon III, or from SOE’s Directors, Executives who are a level under director position, or SOE’s subsidiaries which hold strategic values or have significant contribution in SOE’s, other source may come from external candidates. External candidates submit proposal directly to the ministry  
2. Screening
At this stage candidates from Ministry will be screened by Echelon II officials, prospective candidate from SOE will be screened by a Candidate Screening Panel representative from SOE together with SOE Ministry while Prospective from external sources will be screened by Minister, Deputy Minister and Deputy for SOE Human Resources

3. Assessment
In this stage, the prospective appointee from screening process will be continue for further background checks this include financial transaction status or criminal records then designed to be eligible candidate
In order to be considered eligible candidate, candidate must fulfil following qualities
1. Competency standards ( digital leadership, global business savvy, building strategic partnership, driving execution, driving innovation etc.
2. Professional qualification this encompasses financial, commercial, people, operation, technology  
3. Personal traits consist of openness, conscientiousness, extraversion, etc,.

4. Classification
At this stage deputy map out qualified candidates based on result from assessment in order to be classified based on function, sector and cluster of SOEs    
5. Appointment
This final stage succession is made from talent pool by independent and external recruitment agent who evaluate assessments results. To be selected to fill the SOE directorship , prospective appointee must satisfy a number of formal criteria made by the deputy before entering fit – and – proper test (uji Kelayakan) the interview and other method by Succession Committee .

Removal of Directors

Removal of a director in SOE may occurred at any time by resolution of GMS with reasons given.
The reasons may of the following
1. Unable to carry out duties
2. Failure fulfil obligation in the agreed contract
2. Violating association article provision
3 Involved in unlawful action that harm to SOEs or state interest
4. Found guilty by court
5. Long term absence or serious or prolong illness

Prohibitions of Directors

1. Directors in BUMN, regionally-owned enterprises, private-owned enterprises;

2. Board of Commissioners/Supervisory Board in BUMN and other companies;

3. Other structural and functional positions in central and/or regional government agencies/institutions;

4. Other positions in accordance with the provisions of the legislation;

5. Political party administrators, members of the legislature and/or regional heads/deputy regional heads;

6. Other positions that may cause a conflict of interest; and/or

7. Become a legislative candidate or a candidate for regional head/deputy regional head
8. Members of the Board of Directors are prohibited from holding concurrent positions as members of the Board of Commissioners in other companies unless Board of Commissioners in the subsidiary of the BUMN/SOE affiliated company concerned, provided that they are only entitled to the highest income from the positions they hold, unless otherwise stipulated by the Minister.Or Board of Commissioners in other companies to represent/fight for the interests of SOEs as long as they obtain permission from the Minister of SOEs.

Procedure and Mechanism Directorship State Owned Enterprises (BUMN) Appointment

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