Indonesia’s equity market faced a sudden shock when MSCI warned it might relegate the country to “standalone market” status, a move that could lead to investor outflows. Understanding how the government is responding helps investors gauge future risks and opportunities.

MSCI warned it could relegate Indonesia to “standalone market” status, which could trigger investor outflows. The warning caused the steepest one‑day fall in Indonesian stocks in 28 years.

Investment Minister Rosan Roeslani said authorities have improved free‑float and the disclosure of holdings above 1%, but more work is needed on enforcement and on concentrated stocks. He added that reforms are being stepped up and that officials meet regularly with MSCI to address the issue.

The government plans to begin divesting stakes in state‑owned entities next year, using IPOs or private placements. Airports, seaports and healthcare are expected to be the first targets, and the privatization could be done at the holding level, the operational level, or both.

Rosan, who also heads the sovereign wealth fund Danantara, said the fund will open offices in New York and Hong Kong and is planning a Saudi office after buying land and hotels in Mecca. Danantara aims to invest more than this year’s estimated $14 billion, shifting its domestic‑international investment ratio from roughly 80 %‑20 % toward 60 %‑40 %. The fund may also issue additional debt, such as Panda, Dim Sum bonds or a 30‑year Eurobond, following its $1.5 billion Eurobond debut in June.