Industries in Indonesia operate within an environment characterized by economic volatility, regulatory changes, domestic and global market dynamics, and increasing competitive pressure. These conditions expose companies, across large, medium, and conglomerate structures, to heightened risks of performance deterioration and business uncertainty.

In this context, companies may enter phases of operational distress, liquidity pressure, or structural transition that require timely, well-structured managerial responses. Two approaches that have proven relevant and increasingly applied in Indonesian corporate practice are Turnaround Management and Interim Management.

Characteristics of Industrial Challenges in Indonesia

Compared to mature markets, Indonesian industries exhibit distinct characteristics that influence corporate recovery strategies, including:

• High sensitivity to macroeconomic conditions and currency fluctuations
• Exposure to frequent regulatory and policy changes
• Aggressive capital structures in certain sectors
• Uneven levels of corporate governance maturity
• Concentrated ownership structures with dominant controlling shareholders

In sectors such as manufacturing, construction, property, energy, mining, transportation, and financial services, cash-flow pressures and cyclical demand are often the primary drivers of declines in corporate performance.

Turnaround Management in the Indonesian Industrial Context

Turnaround Management in Indonesia serves as a structured approach to restoring companies experiencing declining performance due to internal inefficiencies or external shocks. This approach has become increasingly relevant given the prevalence of liquidity constraints and complex financing structures across industries.

Solutions Provided by Turnaround Management

In Indonesian practice, turnaround management typically involves:

• Short-term cash flow stabilization, including cost controls and working capital optimization
• Assessment of business model viability in response to domestic market changes
• Financial restructuring, including creditor negotiations and debt rescheduling
• Organizational streamlining and strengthening of internal control functions
• Operational strategy realignment to match market capacity and regulatory requirements

This approach aims not only to preserve short-term business continuity but also to mitigate broader systemic risks affecting stakeholders and industry ecosystems.

Interim Management as a Response to Leadership Constraints

In many Indonesian companies, corporate crises are compounded by limitations in managerial capacity, arising from conflicts of interest, complex ownership structures, or vacancies in key leadership positions. Under such circumstances, Interim Management becomes a critical leadership solution.

Interim management involves appointing experienced executives for a defined period to assume strategic roles such as:

• Interim Chief Executive Officer (CEO)
• Interim Chief Financial Officer (CFO)
• Interim Chief Operating Officer (COO)
• Chief Restructuring Officer (CRO)

The presence of interim executives provides independent perspectives and execution‑focused leadership, which are often difficult to achieve through internal management during periods of distress.

Integration of Turnaround and Interim Management in Local Practice

In Indonesian industrial practice, turnaround and interim management are frequently implemented in an integrated manner. Interim executives act as change agents, ensuring that turnaround strategies are executed effectively, particularly in:

• Strategic decision‑making under time constraints
• Managing relationships with creditors, regulators, and shareholders
• Enforcing financial and operational discipline
• Preparing the organization for transition to a stable, permanent management structure

This integration is especially critical given the complexity of Indonesia’s regulatory environment and business landscape.

Industrial Conditions Requiring These Approaches

Turnaround and interim management are typically required when Indonesian companies face:

• Liquidity pressure that threatens business continuity
• Debt restructuring processes, whether commercial or legal in nature
• Significant and recurring performance deterioration
• Ownership changes, mergers, or post-acquisition integration
• Inadequate internal management responses to crises

Timely and coordinated managerial intervention at the early stages of distress significantly increases the likelihood of successful recovery.

Strategic Value for National Industrial Sustainability

From an industry and national economic perspective, the application of turnaround and interim management contributes strategic value in the form of:

• Prevention of systemic corporate failures
• Enhancement of corporate governance quality
• Preservation of employment and supply chain continuity
• Strengthening industrial resilience to external shocks
• Transfer of professional and disciplined management practices

Accordingly, these approaches serve not only individual companies but also the broader stability of Indonesia’s industrial ecosystem.

Conclusion

In Indonesian industries, turnaround and interim management are increasingly essential managerial approaches for navigating corporate crises and transitions. The characteristics of the domestic market, ownership structures, and regulatory dynamics demand solutions that are adaptive, structured, and execution‑oriented.

When applied appropriately, these approaches enable companies to manage periods of distress effectively, restore performance, and establish stronger foundations for long-term sustainability amid the evolving national industry landscape.

For companies facing operational distress or organizational transition, Sandiva provides specialized Turnaround Management and Interim Management solutions to restore stability and performance. Connect with Sandiva to implement structured, high-impact strategies tailored to Indonesia’s complex industrial landscape.

Contributor: Putut Sulistyo - Financial Advisor