MSCI proposal likely to have brief impact on Indonesia, governor says
The index provider is considering moving Indonesia into its standalone category, with a final decision due by late June 2027.
Recent capital outflows following MSCI’s proposed stock-market reclassification are unlikely to have a lasting impact on Indonesia, according to Bank Indonesia Governor Destry Damayanti. She told a Kadin National Leadership Meeting audience in Jakarta that better governance could help rebuild overseas investors’ confidence.
MSCI is consulting market participants about whether Indonesia should lose its emerging-market classification and enter the standalone category. It plans to deliver its decision by late June 2027 and issue updates as the consultation proceeds.
The index provider reported growing investor concerns about whether Indonesia’s equity market is investable. Those concerns include unresolved questions surrounding ownership of shares and allegations that trading has been coordinated.
Damayanti described the country’s economic fundamentals as strong and said they could underpin continued foreign investment. In her view, MSCI’s proposal could spur faster reforms to market transparency, regulation and governance.
She also cited action by the Financial Services Authority (OJK) to improve how the market operates. She said the regulator’s quick response and coordination through the Financial System Stability Committee (KSSK) would help preserve international investor confidence in Indonesia’s economic prospects.
