This Week in Indonesian Business and Investment (25-1 Oct 2026)

This Week in Indonesian Business and Investment (25 September - 1 October 2026)

Indonesian markets closed out the third quarter in a distinctly turbulent mood, with the confluence of a cabinet reshuffle, structural exchange reforms, and a wobbling rupiah dominating the narrative even as the underlying story of the week remained one of accelerating institutional change.

The most consequential domestic development was President Prabowo Subianto’s reshuffle of the Red and White Cabinet, which rattled investor sentiment and sent the Jakarta Composite Index (IHSG) tumbling to a two-month low of 6,009.50 on Thursday, a 1.02 per cent decline driven by heavy selling in consumer non-cyclicals, basic materials, and technology shares. Foreign investors continued their retreat throughout the week, with net selling recorded across multiple sessions even as the index briefly touched the 6,000 threshold intraday. Compounding the unease was the rupiah’s persistent slide towards, and briefly through, the psychological Rp18,000 per US dollar barrier, prompting Bank Indonesia Governor Destry Damayanti to defend the central bank’s decision to hold the BI-Rate at 5.75 per cent while deploying a recalibrated intervention toolkit. Notably, BI has scaled back costly spot market interventions to just 30 per cent of its total activity, leaning instead on Domestic Non-Deliverable Forwards and NDF instruments to conserve foreign exchange reserves, alongside hedging cost incentives that have already drawn positive interest from non-resident investors. HSBC’s own projections diverged wildly across reports, but the consensus direction pointed towards continued pressure from a strong US dollar, rising US Treasury yields, and geopolitical tensions in the Middle East and Strait of Hormuz.

Structurally, the Indonesia Stock Exchange (IDX) delivered its most significant market reforms in years. The abolition of the Rp50 minimum share price floor, replaced with a Rp1 threshold, triggered immediate volatility as 26 so-called “gocap” stocks plunged towards their new fair value, including GoTo Gojek Tokopedia, which hit the auto-rejection floor on consecutive days before settling near Rp27-43. IDX President Director Jeffrey Hendrik defended the move as essential for genuine price discovery, while also overseeing the removal of 92 issuers from the Special Monitoring Board under revised criteria incorporating a new Price Impact Ratio. Simultaneously, short selling returned to the Indonesian market for the first time in years on 1 October, with 50 investors opening accounts against five eligible stocks including Astra International and Bank Central Asia, though trading activity remained thin in its opening days. These reforms coincided with the slow-moving demutualisation of the exchange itself, with Danantara confirming it would seek only a 5 to 10 per cent stake, dispelling rumours of a 40 per cent controlling position, ahead of an Extraordinary General Meeting scheduled for 28 October.

Corporate restructuring was a dominant theme across state-owned enterprises. Telkom Indonesia completed perhaps the week’s most consequential corporate action, finalising the spin-off of its wholesale fibre connectivity business into PT Telkom Infrastruktur Indonesia (InfraNexia) in a transaction valued at nearly Rp49.9 trillion, transferring over 90 per cent of network infrastructure assets as new President Director Nanang Hendarno, who succeeded Dian Siswarini, confirmed the “TLKM 30” transformation remains on track. Pelindo pressed ahead with reducing its subsidiary count from 41 to around 21-24 entities, while also launching ADHARA, a digital platform to integrate the national maritime logistics ecosystem. Wijaya Karya (WIKA) outlined plans to restructure Rp27.8 trillion in debt alongside Rp5.5 trillion in asset divestments through 2028, and separately welcomed the prospect of the government assuming management of the loss-making Jakarta-Bandung high-speed rail project. Adhi Karya divested toll road and water utility stakes worth Rp1.9 trillion, while Waskita Karya settled a Rp722 billion bond obligation through a government guarantee mechanism, even as its subsidiary Waskita Beton Precast faced a trading suspension over unpaid bond interest. The planned merger of KAI and INKA, targeted for completion before January 2027 under Danantara’s broader SOE consolidation drive, points to a continuing wave of sectoral restructuring that will also eventually touch Pertagas and PGN.

On the investment and trade front, Indonesia’s downstreaming ambitions moved decisively beyond nickel. BKPM unveiled a roadmap spanning 28 commodities targeting USD 618.1 billion in investment by 2040, with electric vehicle batteries and Battery Energy Storage Systems identified as the second phase of the strategy, promising up to three million new jobs. Adaro Andalan Indonesia (AADI) completed its divestment of Kestrel Coal Group to Yancoal Australia, banking roughly USD 814 million to fund domestic expansion, while Bank Mandiri issued a USD 750 million perpetual bond to bolster capital. The Indonesia-European Union CEPA continued generating optimism, with BKPM and Gapki both flagging opportunities in renewable energy and palm oil respectively, tempered by warnings over local content requirements and EUDR compliance. Trade data offered mixed signals: Indonesia’s August trade surplus reached USD 3.55 billion on the back of stronger non-oil exports, even as Jakarta’s own export value fell nearly 20 per cent year-on-year. The 41st Trade Expo Indonesia, drawing buyers from 113 countries and over 1,500 exhibitors, aimed squarely at a USD 17.5 billion transaction target, with new attention on AI services and a push to brand Indonesian coffee globally. Minister Budi Santoso’s appearance at the G20 Trade Ministers’ Meeting, where he warned against food being weaponised geopolitically, underscored Jakarta’s growing emphasis on multilateral trade diplomacy.

Regional and infrastructure stories also carried weight. Jakarta Governor Pramono Anung advanced plans to recapitalise Bank Jakarta, expand Transjakarta into sea and air transport with capital rising to Rp13.4 trillion, and establish a Rp5.6 trillion reserve fund to underpin municipal bond issuance, though approval from the central government remains pending. BP Batam flagged a potential Rp500 trillion data centre investment wave, while West Java’s suspension of the Rp3.5 trillion BDx data centre project in Purwakarta, prompting Minister Rosan Roeslani to intervene, highlighted the regulatory friction that still accompanies Indonesia’s digital infrastructure ambitions.

Looking ahead, the coming weeks will test whether Bank Indonesia’s calibrated defence of the rupiah can hold without resorting to a rate hike, something economists increasingly see as plausible before year-end given the “higher for longer” global rate environment. Equally, markets will be watching how the IDX’s twin reforms, the Rp1 price floor and reintroduced short selling, bed in once liquidity deepens beyond the current handful of participants. With Danantara’s demutualisation stake, the KAI-INKA merger, and further SOE streamlining all converging towards early 2027, Indonesia’s institutional architecture is being reshaped at a pace rarely seen in recent years. The durability of investor confidence through this transition, amid cabinet changes, currency pressure, and ambitious downstreaming targets, will likely define the narrative well into the final quarter of 2026.