Indonesia’s Capital Market Reforms Must Show Results: MSCI

RRI.CO.ID, Jakarta – Indonesia’s capital market status as an Emerging Market is once again caught in the spotlight of global investors. Morgan Stanley Capital International (MSCI) notes that the effectiveness of Indonesia’s capital market reforms still needs to be proven through consistent implementation.

In the MSCI 2026 Market Classification Review report published on June 23, 2026, MSCI revealed concerns among several international institutional investors regarding the transparency of stock ownership and indications of coordinated trading in the Indonesian stock market.

These conditions are seen as potentially complicating the assessment of the actual free-float ratio and disrupting efficient price-discovery mechanisms.

MSCI noted various improvement measures introduced by the Indonesian Financial Services Authority (OJK), the Indonesia Stock Exchange (IDX), and the Indonesian Central Securities Depository (KSEI).

These reforms include increased disclosure requirements for shareholders with holdings exceeding 1 percent, more detailed investor classifications, the implementation of a High Shareholding Concentration (HSC) framework, and plans to raise the minimum free float threshold to 15 percent.

The Head of Market Classification and Taxonomies at MSCI, Raman Aylur Subramanian, emphasized that market classification depends on the level of accessibility and ease of investment as directly experienced by global institutional investors.

“Index inclusion and market classification are not static judgments. They must be continuously assessed against market changes and the experience of international institutional investors,” Subramanian said in an official MSCI press release, as quoted in Jakarta on Wednesday, June 24, 2026.

Therefore, Subramanian added, the success of the reforms is measured not only by the policies announced but also by the tangible impact felt by market participants.

MSCI stated it will continue to monitor the effectiveness of these reforms in enhancing transparency, determining free float, and strengthening Indonesia’s investment eligibility. The organization emphasized that sustained implementation is a key factor in assessing market accessibility.

If sufficient progress is not evident by the time of the MSCI Index Review in November 2026, MSCI noted that various options may be considered. One of these is to open consultations regarding the possibility of reclassifying Indonesia from the Emerging Market category to the Frontier Market category.

MSCI’s latest review serves as an important warning for the national capital market. Success in strengthening market governance, transparency, and liquidity will determine Indonesia’s ability to maintain its emerging market status while preserving its appeal to global capital flows. ***