Jakarta. Concerns over recurring market dysfunction and weak enforcement are the main reasons MSCI is considering downgrading Indonesia’s stock market from emerging-market to standalone status, the Financial Services Authority (OJK) said on Saturday.

Agus Firmansyah, head of OJK’s capital market, derivatives, and carbon exchange regulation and development department, said the global index provider remained concerned that problems previously seen in the Indonesian market could happen again, despite a series of reforms announced by authorities.

“Although reforms have been announced, they still have concerns about market dysfunction,” Agus said at an OJK and capital market industry workshop for journalists in Jakarta.

He cited past cases involving shares of renewable energy company Barito Renewables Energy (BREN), coal miner Petrindo Jaya Kreasi (CUAN), and Dian Swastatika Sentosa (DSSA).

MSCI wants to see stronger preventive measures by OJK and the Indonesia Stock Exchange (IDX), alongside enforcement actions that deter violations, Agus said. Sanctions should not only prevent offenders from repeating misconduct but also serve as a warning to other market participants.

MSCI has acknowledged several reforms introduced by Indonesian authorities, including disclosure of shareholders with stakes above 1%, an expansion of investor classifications from nine to 39 categories, reporting requirements for highly concentrated share ownership, and a gradual increase in the minimum free float requirement to 15%.

However, the measures have yet to ease concerns over market transparency and enforcement. MSCI has said feedback from market participants indicates that a downgrade to frontier-market status would not adequately reflect the severity of the problems. It is therefore considering a consultation on classifying Indonesia as a standalone market, a category for markets with severely deteriorated accessibility.

The proposed reclassification remains under consultation until April 30, 2027, with a final decision expected by June 30.

In the meantime, MSCI’s restrictions on Indonesian securities remain in place. The index provider will not add Indonesian companies to its indexes or increase their foreign inclusion factors and share counts. It will also continue removing securities identified by Indonesian authorities under the high shareholding concentration framework and use shareholder disclosure data to adjust free-float estimates.

The IDX Composite Index fell 7.03% in the week ended Oct. 30, closing at 5,057.05, down from 5,439.26 a week earlier. Market capitalization fell 7.52% to Rp8,862 trillion. The decline has brought the JCI’s losses since the start of the year to about 41.52%, the worst performer among major indexes.

Foreign investors recorded net sales of Rp138.71 billion on Friday. Their cumulative net selling for 2026 reached Rp 97.92 trillion.

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