Implementation of the Equity-based Trust in the State-Owned Enterprises in Indonesia

Abstract

Purpose: State-owned enterprise directors in Indonesia function as management and as the representation of the company based on the principle of fiduciary duty in good faith and trust. The director also function as public official, where mistakes in actions that could harm the state finance can be categorized as corruption. In this role ambiguity, this study seeks to investigate the implementation of the concept of trust in the legal system in Indonesian stateowned enterprises. Approach/Methodology/Design: The research in this study uses the doctrinal method, known as the normative research method, to explain the role of the director in the implementation of trust in a state-owned enterprise. Findings: The results showed that the implementation of trust can be done through equity, in which a person has an object for the benefit of the other party. Equity requires the fulfilment of obligations based on trust, which makes the person who has the object in the law as the legal owner, to the beneficial owner. Practical Implications: The The application of the concept of trust in SOE directors as a public official needs to be clarified because state-owned enterprises are state-owned legal entities which must also be financially accountable. Originality/value: The study first analyze the trust in SOEs in relation with the function of board of directors in carrying out the obligations as stipulated in the LLC Law, and being responsible for the management of the company, with the aim of generating profits with the good corporate governance.

Study on Perfection of the Legal System under the Background of the Reform of State-Owned Enterprises

“…In August 2018, the Office of the State-owned Enterprise Reform Leading Group of the State Council issued the "Double Hundred Actions" Work Plan for the Reform of State-owned Enterprises, and decided to select more than 100 subsidiaries of central enterprises and more than 100 local SOEs, and under the guidance of the "1+N" policy system for the reform of SOEs, to further promote comprehensive reform between 2018 and 2020 [6]. The main goal of this policy is to take the lead in making breakthroughs in key areas and key links of reform, and to create a group of state-owned enterprise reform pioneers with scientific and complete governance structure, flexible and efficient management mechanism, strong leadership of the Party, and significantly improved innovation ability and market competitiveness.…”