Bestuur E-ISSN 2722-4708 | P-ISSN 2302-3783 Vol.11, No.1, August 2023, pp. 171-190 171 https://dx.doi.org/10.20961/bestuur.v11i1.61326 bestuur_journaleditorial@mail.uns.ac.id Legal Policy of State Financial Losses Arrangement in a State-Owned Enterprise Gde Made Swardhana a,1,* , Seguito Monteiro b,2 a Faculty of Law, Universitas Udayana, Denpasar, Indonesia. b Faculty of Law, Universidade Dili, Dili, Timor Leste. 1 gdmade_swardhana@unud.ac.id*; 2 s.monteiro_1981@yahoo.com; * corresponding author 1. Introduction Generally, institutions are commonly perceived as factors that impede economic performance. However, a body of research presents an alternative perspective, arguing that institutional constraints can actually be beneficial and that the concept of complementarity plays a vital role in fostering better outcomes. This study aims to highlight the correlation between institutional complementarities and economic performance, with a specific focus on two distinct institutional forms: the State and finance. By examining these two institutions, we aim to develop a comprehensive understanding of state capabilities that takes into account the role of financial systems. Following the conventional definition of institutional complementarities, we consider two institutions to be complementary when the presence of ARTICLE INFO ABSTRACT Article history Received: May 15, 2022 Revised: June 14, 2023 Accepted: June 15, 2023 Keywords Bankrupt; China; Loss Arrangement; State Financial; State-Owned Enterprise; This research aimed to examine the elements of state loss in regulations concerning the legal policy of state financial arrangements in a bankrupt state-owned enterprise and to analyze the effort of asset recovery related to state loss due to corruption based on the prevailing law in Indonesia and China. This is normative legal research with a comparative approach, with China being taken as a comparison. The study indicated that the elements of state loss are short of money, securities, and goods; it was caused by unlawful actions, either intentionally or negligently; and losses whose amount can be calculated based on the findings of the authorized agency or appointed public accountant, in the Indonesian legal system, asset recovery efforts can be examined from the perspective of criminal law and administrative law. The substance of state finances reveals the same element, namely that the financial loss of SOEs is a loss to state finances. In the execution of court decisions on SOE-owned assets in bankruptcy cases, the regulation does not provide fair legal recognition, protection, certainty, and equal treatment before the law in the management and accountability of state finances. This is an open-access article under the CC–BY 4.0 license.