Indonesia’s government has promised swift reforms to its financial markets after an $80 billion sell-off rattled investor confidence and led to the resignation of Indonesia Stock Exchange (IDX) CEO Iman Rachman. The dramatic market turbulence came after MSCI flagged potential concerns over share ownership and trading transparency, even hinting at a possible downgrade of Indonesian stocks to frontier market status.
Speaking at a press conference, Indonesia’s Chief Economic Minister Airlangga Hartarto stressed the government’s commitment to enhancing market transparency and corporate governance. Proposed measures include doubling the free float requirement to 15%, allowing pension and insurance funds to increase capital market investments from 8% to 20% of their portfolios, and verifying the affiliations of shareholders holding less than 5% of company stock.
“The government guarantees protection for all investors by maintaining good governance and transparency,” Hartarto said, reassuring markets after the sharp two-day 8% drop in the Jakarta Composite Index. Following the announcement, the index rebounded slightly, gaining 1.18%, while the rupiah stabilized near 16,790 per U.S. dollar.
Iman Rachman resigned to take responsibility for the market turmoil, expressing hope that his departure would pave the way for improvements in the capital market. The Financial Services Authority (OJK) confirmed that operations would continue uninterrupted and will lead the implementation of reforms to address MSCI’s concerns by May.
Analysts say the crisis highlights the fragility of investor confidence in the wake of recent political and fiscal developments, including increased state involvement in financial markets. Mohit Mirpuri, portfolio manager at SGMC Capital, noted, “This is a reset and an opportunity for the exchange to emerge stronger with clearer standards and governance.”
Foreign investors have already reacted, selling roughly $645 million in shares over the two-day rout, following $1 billion in outflows in 2025. Authorities are hopeful that the proposed reforms and improved communication with MSCI will restore confidence and stabilize the market.
Despite recent shocks, officials emphasize that Indonesia’s economic fundamentals remain sound, and measures are underway to ensure long-term investor protection and market stability.
Source : Reuters
