January 30, 2026 | 03:08 pm
TEMPO.CO, Jakarta - Indonesia’s government plans to accelerate the demutualization of the Indonesia Stock Exchange (IDX) following a recent sell-off in the domestic stock market that was triggered by negative sentiment from global index provider Morgan Stanley Capital International (MSCI) and rating downgrades by major financial institutions.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the move is part of a broader structural reform aimed at strengthening Indonesia’s capital market and improving governance at the exchange.
“This is a structural transformation intended to reduce conflicts of interest within the stock exchange, between exchange managers and exchange members, and to prevent unhealthy market practices,” Airlangga said at a press conference at the Danantara Building in Jakarta on Friday, January 30, 2026.
The announcement came after Indonesia’s Composite Stock Price Index (IHSG) declined earlier this week, following MSCI’s critical assessment of the Indonesian market, as well as separate downgrades by UBS Group AG and Goldman Sachs.
Airlangga said the government is considering fast-tracking the demutualization process within this year. Demutualization refers to the conversion of the stock exchange from a member-owned organization into a for-profit company with a clear separation between ownership, management, and trading participants.
According to him, the process would also open new investment opportunities, including potential participation by Indonesia’s sovereign wealth fund (SWF) and other institutional investors.
“The demutualization of the exchange is already mandated under the Financial Sector Development and Strengthening Act,” Airlangga said, referring to the Financial Sector Development and Strengthening Act (FSDSA). “In the next phase, the exchange is expected to move toward becoming a publicly listed company.”
The government has also pledged to reinforce investor protection and improve transparency in the capital market. “The government guarantees protection for all investors by strengthening governance and ensuring transparency of information,” Airlangga added.
Separately, the Financial Services Authority (OJK) has targeted the completion of IDX demutualization by the first half of 2026. However, the draft government regulation (RPP) governing the demutualization process is still under discussion.
MSCI had previously flagged several structural issues in Indonesia’s capital market, including the low free float of listed companies. Free float refers to the proportion of shares available for public trading.
According to MSCI, the average free float in Indonesia remains below 15 percent, a threshold it considers important for market accessibility and liquidity.
MSCI also highlighted concerns over limited transparency in share ownership, warning that these conditions could lead to distorted price formation in the market.
In response, Airlangga said that OJK and the IDX are expected to gradually increase the free float requirement from the current level of around 7.5 percent to 15 percent, in line with MSCI’s expectations.
“This level is actually comparable with practices in several other countries, because Indonesia’s free float has been very low,” he said.
Airlangga compared Indonesia’s situation with regional and global markets. Thailand, he noted, applies a similar minimum free float requirement. Other markets such as Singapore, the Philippines, and the United Kingdom have minimum levels of around 10 percent.
The government hopes that accelerating demutualization and increasing free float levels will restore investor confidence, enhance market credibility, and strengthen Indonesia’s position in global capital markets.
Read: Timeline of Indonesia's IHSG Slump Leading to IDX CEO's Resignation
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