Indonesia's capital market turmoil spurs leadership change and messaging shift

Indonesia’s capital markets were thrown into turmoil in late January after a sharp sell-off in equities raised the risk of the country being downgraded by global index provider MSCI, exposing long-standing concerns around market transparency, liquidity and governance. The episode culminated in leadership changes at both the Indonesia Stock Exchange (IDX) and the Financial Services Authority (OJK), as the government moved to reassure jittery investors and restore confidence.

The sell-off began after MSCI flagged potential issues that could affect Indonesia’s continued inclusion in its emerging market indices, triggering heavy foreign outflows and repeated trading halts on the IDX. MSCI flagged concerns over limited transparency in shareholding structures and low free-float levels, alongside the risk of coordinated trading that could distort fair price formation. The Jakarta Composite Index suffered its steepest decline in decades, wiping tens of billions of dollars off market capitalisation and fuelling fears of sustained capital flight if reforms were not swiftly addressed.

As pressure mounted, the government publicly committed to meeting MSCI’s demands, including improving free-float levels, strengthening market supervision and accelerating structural reforms. The crisis quickly shifted from a market event to a credibility test - not only of regulation, but of how Indonesia presents itself to global investors.

Don't miss: How can OJK’s new regulation add more transparency in crypto ads?

On 30 January, IDX president director Iman Rachman resigned, acknowledging the severity of the market turmoil. “Even though market conditions have improved this morning, I want to state that, as a sign of my responsibility for what happened over the past two days, I hereby announce my resignation,” Rachman said, framing his departure as accountability for the recent volatility.

Finance minister Purbaya Yudhi Sadewa backed the move, positioning it as a necessary step to rebuild trust. “I see this as a positive signal. It shows investors in both the capital market and the real sector that we are managing problems quickly and seriously,” he said, reinforcing the government’s intent to respond decisively to global investor concerns.

IDX subsequently appointed Jeffrey Hendrik, previously its director of business development, as acting president director. Beyond stabilising trading conditions, Hendrik has been tasked with engaging directly with MSCI and articulating Indonesia’s reform agenda. “We are committed to developing a world-class capital market in Indonesia, one that is advanced not only in trading activity and market capitalisation, but also in transparency and governance,” he said.

The reset extended beyond the exchange. OJK’s top leadership, including chairman Mahendra Siregar and several senior commissioners, also stepped down, underscoring the scale of the government’s response. President Prabowo Subianto has since instructed both institutions to prioritise market stability through structural reforms, demutualisation efforts and measures to improve liquidity.

For marketers and investor relations teams, the episode highlights how market performance, regulation and narrative management are closely intertwined. Analysts have attributed the downturn largely to fears of prolonged foreign outflows following MSCI’s warning - a dynamic that risks weakening Indonesia’s positioning as an investable growth market if left unaddressed.

In response, IDX and OJK have outlined reform commitments, signalling efforts to restore confidence and reshape perceptions around openness and governance. While sentiment remains fragile, officials say early signals from overseas investors suggest reforms are being closely watched.

Danantara Indonesia CEO Rosan Roeslani noted that confidence could return if execution follows intent. “I believe the market will react positively, as I have spoken with foreign investors over the past two days. They have been understanding and have given positive signals regarding the reforms that will be implemented.”

Related articles:
Prabowo 100 days: What are some of the noticeable online sentiment shifts?
Indonesia's new tax rule may force eCommerce brands to rethink their future
Crowds without campaigns: How unrest disrupted Indonesia's marketing calendar