Anticipating Fed Impact, Prabowo Instructs Strengthening of Fundamentals
Jakarta (ANTARA) - President of the Republic of Indonesia Prabowo Subianto has instructed the strengthening of national economic fundamentals to anticipate the impact of policies from the US Federal Reserve, The Fed, in order to safeguard the stability of the domestic financial market from global pressures.
In a limited meeting between President Prabowo and the Financial System Stability Committee (KSSK) at Merdeka Palace on Tuesday (5/5) evening, Prabowo emphasised to his aides the need to build confidence in the country’s economic fundamentals.
“We can report that there has been an outflow, yes, due to the current global geopolitical and geo-economic conditions, where of course from The Fed’s ‘higher for longer’ stance,” said Otoritas Jasa Keuangan (OJK) Commissioner Chairman Friderica Widyasari Dewi, quoted from a press release by the Presidential Secretariat’s BPMI in Jakarta on Wednesday.
Friderica explained that the phenomenon of capital outflows is a result of global dynamics.
However, President Prabowo stressed the importance of confidence in Indonesia’s economic fundamentals so that capital flows can return to the domestic market as conditions improve.
As a form of strengthening fundamentals, OJK has implemented various improvement measures to enhance transparency and global investor confidence.
“All matters that are concerns for global investors regarding the transparency of the Indonesian capital market, where data on the top one percent of shareholders has already been disclosed,” Friderica stated.
In addition to data transparency, the authorities have also revealed data on ultimate beneficial owners.
OJK has also increased share liquidity requirements through regulations on the portion of public shares or free float as part of the strategy to strengthen the structure of the Indonesian capital market.
Regarding the potential adjustment to the MSCI index that may occur, she emphasised that this is a temporary impact from system improvements.
As a long-term strategy to face global volatility, the government and OJK are focusing on deepening the domestic market.
One indicator of its success is the increase in the number of capital market investors, reaching around 5 million single investor identifications (SID) over the past year.
“We are deepening the market by increasing our domestic investors, so that if there is turmoil outside, our market remains more stable,” Friderica added regarding the importance of local investors as a market buffer.