With Indonesian stocks underperforming their regional rivals this year, the country’s Financial Services Authority (OJK) has outlined four key measures to address concerns about market transparency in Southeast Asia’s biggest economy.
Analysts said that while the OJK proposals respond to the issues raised by global index providers Morgan Stanley Capital International (MSCI) and FTSE Russell, they will take time to implement, leaving Indonesian equities with little impetus.
“Global investor sentiment will not change overnight,” said Liza Camelia Suryanata, head of research at Kiwoom Sekuritas Indonesia. “Investors are not only looking at policy announcements, but also at the consistency of implementation and whether improvements are reflected in market liquidity.”
Investor concerns about the Indonesian market intensified in January, when MSCI announced it would temporarily stop adding Indonesian stocks to its emerging market indexes due to insufficient transparency and free-float ratios. The country’s benchmark Jakarta Composite Index recorded nearly a 9% drop at one point right after the announcement.
FTSE Russell had previously placed Indonesia under special monitoring to assess progress on capital market integrity, transparency and governance, and postponed its latest review of Indonesian equities last month.
The index provider this week reaffirmed Indonesia’s status within its Equity Country Classification, indicating that the market meets minimum standards of accessibility and stability for global investors.
However, as stocks fell further amid the market turmoil sparked by the Iran war, Hasan Fawzi, OJK’s chief capital market supervisor, described the initiatives as efforts to increase transparency and restore investor confidence.
The first measure lowers the disclosure threshold for shareholder identities to those holding more than 1% of shares, from the previous 5%. Authorities said the new threshold is more advanced than practices in several developed markets.
The policy is expected to improve liquidity and enhance the quality of price formation. “We hope to build greater trust among investors and improve the attractiveness of the Indonesian market,” Fawzi said.
The second measure requires a minimum free float of 15%, up from the previous 7.5%. The Indonesia Stock Exchange (IDX) has given listed companies up to three years to comply.
IDX data shows that 267 listed companies currently have a free float below 15%, with 49 of them accounting for around 90% of total market capitalization. The bourse’s priority is for large capitalization companies to meet the new threshold.
However, market participants have raised concerns over the cost of compliance. Katharine Grace, chairwoman of the Indonesian Corporate Secretary Association, said increasing the free float could cost between IDR 1–8 trillion (USD 58–468 million) per company.
The free-float rule is among the issues flagged by MSCI, which cited concerns from international investors about the reliability of data from Indonesia’s central custodian, KSEI.
According to MSCI, investors have raised “fundamental investability issues” stemming from opaque shareholding structures, as well as “concerns about possible coordinated trading behavior that undermines proper price formation.”
“That’s a polite way of suggesting that Indonesian stocks are vulnerable to price manipulation by undisclosed insiders,” Chris Leahy of the Asian Corporate Governance Association wrote in a report.
The third reform addresses investor classifications with the aim of enhancing transparency. Currently, investor categories are broadly divided between individuals and institutions. Under the revised framework, institutional classifications will be expanded to include identities such as political parties and sovereign wealth funds.
Market participants say the move could help address longstanding concerns over unclear ownership structures. Aji Martono, chairman of the Indonesian Stock Market Professional Association, said that layered ownership and the identification of ultimate beneficial owners remain key issues for investors.
“This practice, especially in cases of layered ownership, can be used to mislead the market,” Martono said, adding that clearer classifications would improve visibility over who ultimately controls listed companies.
He also urged regulators and the exchange to take a more proactive approach in detecting irregular trading activity, particularly sharp price movements that may indicate manipulation.
“With the advancement of [artificial intelligence] and data analytics, such activities should be detected automatically,” he said.
The fourth measure involves publishing a high shareholding concentration list, which identifies listed companies with ownership concentrated among a small group of shareholders, including their potential affiliations.
Acting IDX CEO Jeffrey Hendrik said the list would complement existing monitoring mechanisms. “The review process is initiated when a stock falls under high shareholding concentration methodology,” he said. “Once shareholding becomes more dispersed, IDX and KSEI will issue a closing announcement.”
Early data underscores the scale of the challenge. A high shareholding concentration list released by the IDX on April 2 shows nine listed companies with ownership concentrations exceeding 95% and a small number of dominant shareholders.
While analysts have responded positively to the four policy measures, the change in free-float requirements has raised concerns among market participants about unintended consequences. Some companies are weighing the option of going private or delisting due to the high cost of compliance.
One listed company has estimated that increasing its free float could cost as much as IDR 21 trillion (USD 1.2 billion).
“The challenge with this policy,” Suryanata told Nikkei Asia, “is ensuring the market can absorb the additional supply of shares without creating excessive downward pressure, particularly as the domestic investor base is still developing.”
The concern was underscored shortly after the reforms were announced. Solusi Tunas Pratama, a communications infrastructure provider specializing in base transceiver stations, disclosed plans to go private following a review of its operational and ownership structure.
The company said in the disclosure that the decision was made under comprehensive evaluation by the management based on its long-term business strategy regarding more efficient asset management and operational activities.
Solusi Tunas Pratama is 99.99% owned by Sarana Menara Nusantara, another IDX-listed company affiliated with the Djarum Group.
IDX officials acknowledged the delisting risk as part of the transition. Hendrik said such developments may be an unavoidable trade-off in improving market quality.
“In the long run, this will improve our market quality,” said I Gede Nyoman Yetna, the IDX’s director of assessment. “The market is forward-looking, and investors will respond positively.”
However, the reforms are unfolding against a backdrop of broader economic and geopolitical pressures. Despite a temporary ceasefire in the Middle East, global uncertainty continues to weigh on investor sentiment.
Domestically, fiscal risks and policy credibility remain under scrutiny. The fiscal deficit reached 2.92% of GDP last year, close to the legal ceiling of 3%, a level closely watched by investors for its implications on sovereign risk, currency stability and borrowing costs.
Credit rating agencies have also flagged concerns. Moody’s and Fitch have revised Indonesia’s outlook to negative, citing governance challenges and policy unpredictability.
Market activity has yet to fully recover. Yetna said 13 companies are currently preparing to go public this year, which is half of last year’s total of 26 IPOs. The IDX recorded its first new listing for 2026 on April 10, with BSA Logistics Indonesia raising IDR 302 billion (USD 17.7 million).
Yetna reiterated the exchange’s focus on improving market quality, including efforts to increase free float and reduce shareholder concentration among listed firms.
“We hope this transparency will build investor trust,” Yetna told reporters on April 10, “and this cannot be achieved in the short term.”
Despite these early signs of recovery, analysts continue to warn of mounting challenges stemming from the military strikes in the Middle East and from pressure on domestic economic growth.
“Given persistent global uncertainty and slower economic momentum,” said Marolop Alfred Nainggolan, head of research at Praus Capital, “the demands of the reform agenda are becoming increasingly challenging, especially for issuers and prospective companies.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.
Note: IDR figures are converted to USD at rates of IDR 17092.69 = USD 1 based on estimates as of April 13, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.