Regulation on the Write-Off and Removal from Collection of State-Owned Enterprise Assets under BP BUMN Regulation No. 1 of 2026

Introduction

On 15 October 2026, the Head of the State-Owned Enterprises Regulatory Agency (“BP BUMN”) issued BP BUMN Regulation No. 1 of 2026 on the Write-Off and Removal from Collection of State-Owned Enterprise Assets (“BP BUMN Regulation 1/2026”), which came into force on 16 October 2026. BP BUMN Regulation 1/2026 governs the criteria and procedures for writing off assets and removing receivables from collection by State-Owned Enterprises (“SOEs”), including the transfer of assets, reporting, and the implementation of loss-limitation measures (cut loss).

BP BUMN Regulation 1/2026 was promulgated to implement the provisions of Article 3C letter f, Article 40, and Article 62H of the Law on State-Owned Enterprises (“SOE Law”), as most recently amended by Law No. 16 of 2025, as well as Article 12 paragraph (1) and Article 165 paragraph (7) of Government Regulation No. 38 of 2026 on the Management of State-Owned Enterprises (“GR 38/2026”). These provisions provide the Head of BP BUMN with the authority to establish criteria for the write-off and removal from collection of SOE assets, subject to the prior approval of the President.

Key Provisions

Scope and Subject Matter

Article 2 stipulates that SOEs may write off SOE Assets and/or remove Receivables from collection. The SOE Assets subject to this regulation include Fixed Assets and Receivables. Pursuant to Article 3, the subject matter of asset write-offs in respect of Fixed Assets includes immovable Fixed Assets and movable Fixed Assets, while Receivables may be subject to both write-off and removal from collection. The subject matter of write-offs involving assets other than Fixed Assets and Receivables is determined by the Daya Anagata Nusantara Investment Management Agency (“the Agency”) for Persero and by BP BUMN for Perum.

Under Article 1 points 18–19, a write-off is defined as any action to write off SOE Assets from the accounts, whereas removal from collection refers to any action by an SOE to extinguish its right to collect a claim against a debtor. Accordingly, a write-off involves removing assets from an SOE’s accounts, while removal from collection focuses on extinguishing the SOE’s right to collect from a debtor.

Criteria for Write-Offs

Transfer of Fixed Assets and Assets Other than Fixed Assets and Receivables

Article 11 establishes the considerations for transferring Fixed Assets, namely the existence of any one of the following circumstances:

1. The assets are no longer economically or technically viable or beneficial to retain;

2. A more advantageous alternative or replacement is available;

3. The assets are designated for the Public Interest in accordance with applicable regulations and valid spatial plans;

4. The assets are required by a ministry or institution for the performance of state or governmental duties; or

5. The transfer constitutes the only available source of funds for an exceptionally urgent need.

Pursuant to Article 12, transfers may be carried out through sale, exchange, compensation, capital contribution, and/or other methods:

Documentation and Reporting of Write-Offs

SOEs are required to document and record the write-off process (Article 42). The Board of Directors must report its implementation to the Agency, in the case of Persero, or to the Head of BP BUMN, in the case of Perum, in the annual report and/or at any time as necessary (Article 43). The Agency or the Head of BP BUMN must subsequently report to the relevant body within the House of Representatives of the Republic of Indonesia (“DPR RI”) responsible for SOE affairs and to the President (Article 44).

Procedures for the Removal of Receivables from Collection

Article 45 emphasises that SOEs must continue collection efforts in respect of receivables that have already been written off before removing them from collection, in accordance with the SOE’s internal policies. Approval is required in two successive stages:

1. Approval from the Agency, in the case of Persero, or the Head of BP BUMN, in the case of Perum, upon submission of an application accompanied by a legal, economic, and risk assessment, as well as a statement of integrity from the Board of Directors.

2. Approval in accordance with the authority stipulated in the SOE’s articles of association, based on a proposal from the Board of Directors that has obtained approval at the first stage.

Documentation and reporting of the removal of Receivables from collection, including reporting to the DPR RI and the President, follow the same framework as that applicable to write-offs, as stipulated in Articles 47 to 49.

Cut Loss

Article 50 paragraphs (1) and (2) provide that SOEs may undertake cut loss, namely writing off assets below their carrying value and/or ceasing further collection efforts in respect of receivables that have already been written off, in order to prevent greater losses. Such measures may take the form of a write-off with or without the disposal of SOE Assets, as well as the removal from collection of Receivables that have already been written off.

Pursuant to Article 50 paragraph (3), the implementation of cut loss must satisfy three criteria:

1. It is based on an adequate analysis, evidenced by working papers, demonstrating that failure to undertake cut loss could potentially result in greater losses;

2. The decrease in value or loss is not attributable to the fault or negligence of the person implementing cut loss; and

3. There is no direct or indirect conflict of interest.

These three matters are assessed by an independent consultant or a government institution in accordance with its duties, functions, and competencies. Losses resulting from cut loss constitute losses of the SOE. The person implementing cut loss may not be held liable for such losses if all four of the following conditions are satisfied:

1. The losses were not caused by fault or negligence;

2. The management of the matter was conducted in good faith and with due care;

3. There was no conflict of interest; and

4. No personal benefit was obtained.

Transitional Provisions

Article 54 governs the continued validity of write-off approvals granted before this BP BUMN Regulation came into force. First, approvals for the write-off of Fixed Assets and SOE assets other than Fixed Assets and Receivables remain valid for the duration specified in the respective approvals. Second, approvals for the write-off of Receivables remain valid, while the process for removing such Receivables from collection must be carried out in accordance with this BP BUMN Regulation.

Closing

BP BUMN Regulation 1/2026 governs the criteria and procedures for writing off SOE Assets and removing Receivables from collection, covering the requirements for write-offs, asset transfers, approvals, documentation, and reporting, through to the implementation of cut loss. This regulation provides a framework for SOEs to carry out write-offs and removals from collection in accordance with the established criteria and procedures.

In implementing the regulation, SOEs must ensure that every write-off and removal from collection satisfies the applicable requirements, is supported by adequate documentation, and is carried out with due regard to the company’s interests and the principles of good corporate governance.