Main Challenges of Collaboration Between BUMN and the Private Sector

Collaboration between State-Owned Enterprises (BUMN) and the private sector in Indonesia is often seen as a solution to accelerate economic development and increase efficiency. However, although there are many potential benefits from this collaboration, there are a number of key challenges that must be faced by both parties.

These challenges primarily arise from differences in priorities in business processes and differences in capabilities and resources. One of the biggest challenges in collaboration between BUMN and the private sector is the difference in priorities in running a business.

BUMN is not only profit-oriented, but also has a high priority on aspects of public services and community welfare. This means that SOEs often have to allocate resources to social and development programs that may not provide immediate financial benefits.

On the other hand, the private sector tends to have a high priority on aspects of profit and innovation. The private sector focuses on efficiency, productivity, and developing products or services that can provide quick and sustainable profits.

These differences in priorities can cause disagreements and tensions in collaboration, especially when business decisions taken by SOEs appear inconsistent with private profit goals.

Differences in capabilities and resources between BUMN and the private sector also pose significant challenges in collaboration. BUMN tends to have greater access to capital, technology and human resources than the private sector.

SOEs, with support from the government, can often secure greater funding and have the capacity to access advanced technology and recruit a competent workforce.

In contrast, the private sector may have limitations in access to capital and technology, but is often more flexible and quick to adapt to market changes. This difference in access can create an imbalance in collaboration, where SOEs may dominate strategic decisions, while the private sector feels limited in its contribution.

To overcome these challenges, a more structured and communicative approach is needed in collaboration between BUMN and the private sector.

Collaboration between BUMN and the private sector has great potential to support sustainable economic development in Indonesia. By understanding and overcoming the main challenges that exist, this collaboration can be more effective and provide optimal benefits for society and the economy as a whole.

Source: Bappenas