When global index provider MSCI warned in January that Indonesia risked being demoted from emerging to frontier market status, it unleashed a wave of volatility, sell-offs and wild trading swings.
Six months on, Jakarta’s investment chief argues the real story is not about whether the country can earn investors’ trust.
“For Indonesia, this is not about short-term market status,” Investment Minister Rosan Roeslani told This Week in Asia in written replies to questions. “It is about building a deeper, more credible, and more investible capital market.”
MSCI’s warning centred on what it characterised as opaque shareholding structures and suspicions of coordinated trading, giving Indonesia until May to show sufficient progress or face a weighting reduction – and possibly a downgrade after consultation.
Rosan said progress had been made through direct talks with MSCI, pointing to efforts by Indonesian authorities to tighten market transparency rules.
Regulator the Financial Services Authority (OJK), the Indonesia Stock Exchange and securities depository KSEI all now require public disclosure of shareholders holding stakes above 1 per cent, alongside more detailed investor classifications, a system to flag highly concentrated ownership and plans to lift the minimum free-float threshold to 15 per cent.