MSCI opened a consultation on moving its Indonesia indexes from Emerging Market to Standalone Market status, citing concerns about transparency and enforcement ahead of a decision due by June 2027.
Investors challenged the proposal during a UBS-hosted call and asked whether Indonesia could retain emerging-market status, Bloomberg News reported, citing people familiar with the discussion. More than 100 participants joined, the outlet reported. MSCI Managing Director Raman Aylur Subramanian told the call, “Indonesia’s case is not an index issue but a market issue,” Bloomberg reported.
MSCI cited opaque shareholding structures, suspected coordinated trading and a lack of evidence of meaningful enforcement. It said market participants had not seen sufficient progress consistently across Indonesia’s equity market. MSCI expects to proceed unless consultation feedback shows clear evidence that market governance and functioning have materially improved.
Authorities have announced measures that include disclosure of holdings above 1%, more detailed investor classifications, reporting on highly concentrated shareholdings and a roadmap to raise the minimum free-float requirement to 15%. MSCI said investors want consistent implementation and evidence of lasting effects. The provider also said opacity and suspected coordinated trading make it harder for investors to assess shares available for trading and observed market prices.
The proposal follows MSCI’s review of Indonesia’s index classification. In June, MSCI said insufficient progress by its November review could prompt a consultation on moving Indonesia to Frontier Market status. Its October proposal instead targets Standalone Market status; MSCI said a Frontier Market classification would not reflect the depth of its concerns.
The Indonesia Financial Services Authority (OJK) said Oct. 21 that sanctions in 2026 covered more than 971 parties, with fines totaling about IDR 2.5 trillion. It also reported 41 completed case examinations and 122 additional cases under enforcement proceedings. OJK said, “Investor confidence must be built through tangible actions, not merely statements.”
MSCI said it would keep a freeze on certain index changes for Indonesian securities in place until further notice. It has not published a threshold for how many months of improved trading would satisfy its concerns. The consultation closes April 30, 2027, and MSCI plans to announce its decision on or before June 30, 2027.
