OJK Prepares Strategy to Reduce Foreign Dependence in Indonesian Stock Exchange

Jakarta — The Financial Services Authority (OJK) has highlighted a troubling trend of declining participation by domestic institutional investors in the stock market. Commercial insurance companies, pension funds (dapen), and institutions such as BPJS have reportedly reduced their investment allocations on the exchange in recent months.

Acting Chairman of the OJK Board of Commissioners, Friderica Widyasari Dewi, acknowledged that data shows the contribution of domestic institutional investors to the stock market has declined.

“Domestic institutional investor participation is trending downwards. We need to examine how we can reverse this trend,” said Friderica, commonly known as Kiki, during the Market Outlook 2026 event at the Indonesia Stock Exchange in Jakarta on Tuesday, 3 March 2026.

According to her, strengthening the role of domestic investors is crucial to maintaining market stability and liquidity. Currently, Indonesia’s stock market liquidity remains significantly influenced by foreign investor capital flows. When foreign investors sell, market volatility increases substantially.

For this reason, the OJK is promoting cross-sector synergy within the financial services industry to increase domestic institutional fund allocations to the capital market. Banks, insurers, and pension funds are being encouraged to strengthen their role in financing the national economy through the capital market.

Friderica also outlined the financial industry’s outlook, which remains fairly solid, with banking credit growth projected at 10-12 per cent, third-party funds at 7-9 per cent, insurance premiums at 5-7 per cent, and pension fund assets at 10-20 per cent. With this capacity, she noted, there remains room to increase stock market investment.

“We want the capital market to become a strong source of financing to support priority national economic programmes. The role of domestic institutional investors is vital for this,” she said.

The OJK emphasised that strengthening domestic participation is aligned with ongoing capital market integrity reforms, including enhanced transparency in ownership, improved governance, and better liquidity structure. These measures are expected to increase confidence and encourage domestic institutions to resume active participation in the stock market.