Indonesia Confident of Retaining Emerging Market Status

The government is confident that Indonesia’s market index will remain in the emerging market category. This was conveyed by Coordinating Minister for Economic Affairs Airlangga Hartarto in Jakarta on Friday, in response to a report by global index provider MSCI Inc. In its 2026 Global Market Accessibility Review, MSCI maintained Indonesia’s emerging market status. The report included one adjustment for Indonesia, namely the ‘Information Flow’ criterion, which was downgraded from ‘+’ to ‘−’. The government views this note as a reinforcement of the capital market reform agenda that has been and is currently underway. “MSCI’s note actually confirms that Indonesia’s economic fundamentals and market access remain strong. The focus is on transparency and market integrity, and this is where,” Airlangga said. “The government, together with the Financial Services Authority (OJK) and the Indonesia Stock Exchange (BEI), has been and continues to implement concrete reforms, ranging from free float adjustments, disclosure of ultimate beneficial owners, to market deepening. We are optimistic that Indonesia will remain on the emerging market path, and the government is committed to completing this reform agenda to maintain investor confidence,” he added. MSCI underscored that Indonesia’s market access, size, and liquidity remain adequate, and there were no issues regarding foreign ownership restrictions highlighted in this year’s review. The areas highlighted for improvement focus on enhancing the quality of shareholding structure disclosure and strengthening pricing integrity, areas that are already priorities for reform by the government and authorities. The provision of market information in English is also ready to be optimised to improve ease of access for global investors. Overall, MSCI stated that this year’s cycle saw more improvements than downgrades across the emerging market group. The accessibility assessment adjustments in 2026 were only experienced by Indonesia and Turkey. It is important to note that these adjustments do not change Indonesia’s status as an emerging market. The official market classification decision will be announced by MSCI through the Annual Market Classification Review on 23 June 2026. Furthermore, the government and relevant authorities are prioritising the strengthening of market transparency and integrity. MSCI’s notes align with the reform direction being accelerated by the Financial Services Authority (OJK) and the Indonesia Stock Exchange (BEI), supported by cross-authority policy synergy. Several government and OJK commitment measures to support the capital market include: first, a free float policy adjustment from 7.5 percent to 15 percent to increase market liquidity, which became effective in March 2026 with phased compliance. Second, transparency of ultimate beneficial owners through system development and ownership disclosure, which is ongoing and being strengthened. Third, disclosure of shareholder names with ownership above 1 percent, which is already in effect with routine publication since March 2026. Fourth, acceleration of the demutualisation of PT Bursa Efek Indonesia (BEI), currently in process. Fifth, integrated market deepening through increasing the investment limit for pension funds and insurance companies to 20 percent, with a focus on LQ45 stocks. Sixth, strengthening law enforcement and sanctions. Seventh, improving corporate governance of listed companies. Eighth, strengthening synergy among stakeholders. Airlangga explained that these measures are reinforced by maintained macroeconomic foundations. Exchange rate stability, controlled inflation, and a prudent fiscal and monetary policy mix serve as anchors for investor confidence in the national economy. ‘The government believes that the combination of structural capital market reforms and macroeconomic stability will continue to strengthen the attractiveness and credibility of the Indonesian market in the eyes of global institutional investors,’ he stated. Meanwhile, on the external sector front, the government and Bank Indonesia continue to maintain market confidence through a measured policy mix, including adjusting the benchmark interest rate to 5.75 percent in June 2026, strengthening stability and deepening the foreign exchange market, prudent financing management including the issuance of foreign currency-denominated Government Securities (SUN), and strengthening monetary and fiscal policy coordination to ensure liquidity adequacy. This combination of measures serves as a buffer for external sector resilience while supporting investor confidence amid global dynamics. Furthermore, the government urges market participants to remain calm and respond to this review proportionally. ‘The government continues to coordinate with MSCI and the global investor community, and ensures the reform agenda progresses consistently ahead of the classification announcement on 23 June 2026 and the next review cycle,’ the Coordinating Minister concluded.