Observer: MSCI classification review should be momentum for reform acceleration

Market observer David Sutyanto believes the notes provided by MSCI in its Market Classification Review 2026 should serve as momentum to accelerate capital market reform in Indonesia. Speaking in Jakarta on Wednesday, David said the review results need to be read proportionally. Indonesia has been retained in the Emerging Market classification, so there is no change in status yet. However, MSCI gave important notes regarding shareholding transparency, free float validity, and alleged coordinated trading, which could affect the perception of the Indonesian market’s investability. “In my view, these notes should be momentum to accelerate capital market reform,” said David, who is also Chairman of the Indonesian Securities Analysts Association (AEI). He assessed that several steps already announced by regulators are heading in the right direction, such as disclosure of shareholder data above 1 percent, more detailed investor classification, a High Shareholding Concentration framework, and a roadmap to increase the minimum free float to 15 percent. “The challenge now is ensuring implementation is consistent, measurable, and its impact is visible to global investors,” David said. Regarding the deadline of November 2026 to demonstrate progress in Indonesian capital market reform, David believes the timeframe is still sufficient but relatively tight. Therefore, he said, what is needed is not just rules, but proof of implementation. If reforms in transparency, surveillance, and enforcement run effectively, David considers Indonesia’s chance of maintaining its Emerging Market status remains open. “The most important thing is maintaining global investor trust through a market that is increasingly transparent, liquid, and credible,” he said. On Wednesday US time, global index provider MSCI released the results of its 2026 market classification review. MSCI acknowledged the transparency reforms announced by the Financial Services Authority (OJK), the Indonesia Stock Exchange (BEI), and the Indonesian Central Securities Depository (KSEI). The acknowledgement covers enhanced disclosure of shareholders with ownership above 1 percent, more detailed investor classification, introduction of a High Shareholders Concentration (HSC) framework, and a roadmap to increase the minimum free float requirement to 15 percent. “While these announcements are steps in the right direction, what matters for international institutional investors is the consistent implementation and sustained effect of these measures across the market,” MSCI wrote. On the other hand, MSCI stated it will continue to assess the scope, consistency, and sustained effectiveness of the Indonesian market, in the context of free float determination and broader investability assessment, which will remain under observation until the MSCI November 2026 Index Review. “If sufficient progress is not observed by the MSCI November 2026 Index Review, MSCI will consider various options for the appropriate treatment of the Indonesian market, which could potentially include a consultation on reclassifying Indonesia from Emerging Markets to Frontier Markets,” MSCI wrote.