On October 15, MSCI, a global index provider, announced it was considering downgrading Indonesia to 'standalone' status, which would exclude the country from major global and regional indexes. The index provider cited suspected coordinated trading behavior and a lack of meaningful enforcement. A final decision is due by the end of June 2027.
President Prabowo responded defiantly during a cabinet address. 'Our country continues to face all sorts of disturbances, including the MSCI. They are trying to intimidate us,' he said. 'We have the strength, the courage and we are willing to make sacrifices, and we refuse to surrender.'
Market reaction has been severe. The Jakarta Composite Index has fallen more than 10 percent since the proposal and nearly 40 percent for the year. The downgrade threat builds on an earlier warning in January 2026 that Indonesia could be lowered to 'frontier' status, which risked pulling as much as $13 billion in passive investment flows.
The market crisis is compounding political pressures. President Prabowo's approval rating has dropped to 44.5 percent, down from 81 percent in November, according to a poll cited by Reuters. Widespread public dissatisfaction with the economy and flagship social policies has fueled protests, with more than 9,000 police deployed in Jakarta ahead of events marking his second year in office.
The turmoil has taken on a diplomatic dimension. Former trade minister Muhammad Lutfi accused Singapore state investors Temasek and GIC of pressuring MSCI to trigger a sell-off. Both entities denied the allegation, with a Temasek executive calling the claims 'patently untrue.' Indonesia Stock Exchange president director Jeffrey Hendrik backed the independence of index providers. 'We have always believed, and continue to believe, that global index providers are independent,' Hendrik said.