Airlangga: MSCI Cannot Dictate to Global Investors

Coordinating Economic Affairs Minister Airlangga Hartarto believes the risk of Indonesia’s stock market being downgraded by MSCI can still be mitigated. Global investors do not rely solely on MSCI indices as investment benchmarks, but also use others, such as S&P and FTSE Russell.

Airlangga stressed that MSCI’s assessment cannot be the sole determinant of investment decisions in Indonesia’s stock market. Each index provider has its own assessment of a country’s capital market.

“MSCI is not the only rating. There are many others, such as S&P and FTSE Russell. One cannot dictate to the others,” Airlangga said when met at the Coordinating Ministry for Economic Affairs office in Central Jakarta, as quoted on Sunday (25 October 2026).

MSCI has previously opened a consultation on the possibility of downgrading Indonesia’s stock market from Emerging Market to Standalone Market status. The proposal is not yet a final decision. The government and capital market authorities still have an opportunity to make improvements by June 2027.

Airlangga acknowledged that an MSCI downgrade could affect foreign investors’ interest in Indonesian shares. However, he said the impact could be contained because investors from the United States, Europe and Asia also use other indices as investment benchmarks.

“The risk can certainly be mitigated. If, for example, MSCI does not recommend our shares for purchase by investors from America, Europe or Asia, there are S&P and others that may recommend them,” he said.

Airlangga also said the fundamentals of companies listed on the Indonesia Stock Exchange (IDX) remained fairly strong, as reflected in their profit and loss performance and dividend payments to shareholders.

He said one area that still needed improvement was compliance with the requirement for a minimum proportion of shares to be held by the public, known as free float.

“If we look at the fundamentals of issuers or companies listed on the stock market, their profit and loss performance is good, and their dividend payouts are also good. What remains is implementing the 15% free-float requirement, as some companies have yet to meet it,” Airlangga said.

The government and the Financial Services Authority (OJK) are pushing to raise the minimum free-float threshold to 15% to improve capital market governance. The policy forms part of efforts to reform Indonesia’s stock market amid MSCI’s review.

Alongside increasing free float, the reforms include plans to demutualise the exchange, changing the ownership and management structure of the IDX. The government will update the public on the reforms ahead of the MSCI consultation deadline in June 2027.

“We have until June next year. One element of the roadmap is to promote the demutualisation of the exchange. These steps and their progress need to be communicated to the public,” Airlangga said.