Indonesia prioritises market reforms as MSCI weighs downgrade

Indonesia’s Financial Services Authority (OJK) says it is focusing on measurable improvements in its capital market as index provider MSCI consults on a possible downgrade of the country’s market classification.

MSCI opened the consultation on October 16 to consider moving Indonesia’s classification from Emerging Market to Standalone Market. OJK Capital Market Supervision Chief Hasan Fawzi stressed that no final decision had been made. Feedback will be accepted until April 30, 2027, and a decision is expected on June 30, 2027.

Working with self-regulatory organisations, including the Indonesia Stock Exchange, OJK is implementing eight reforms covering trading liquidity, corporate governance, transparency and enforcement. These include a gradual increase in the minimum free float to 15 per cent, stricter transparency requirements for beneficial ownership and disclosure of holdings above one per cent.

Other measures expand investor categories from nine to 39 and require publication of the names of companies with concentrated ownership. Hasan said consistent implementation, rather than regulatory changes alone, remained the priority.

Speaking at an investor dialogue organised by Mandiri Sekuritas in Jakarta, OJK Chairperson Friderica Widyasari Dewi said practical action was needed to build investor trust. The regulator said it respected MSCI’s independent assessment and had held 16 structured discussions with the provider between February and October 2026.

OJK described market fundamentals as robust, citing capitalisation of about US$589 billion, ranking second in ASEAN, and 31.1 million investors. It also reported that listed companies’ revenue rose 15.9 per cent in the year to June 2026, alongside growth in net profit.