AmCham Update Vol. 7 #063

MSCI Flags Transparency Concerns as Market-Status Review Looms, Bank Indonesia Raises Interest Rate Again, B50 Fuel to Launch July 1, AI-Based Digital Platform for Social Assistance Nearing, Gov’t working to Secure Coal for PLN

Jun 19, 2026

MSCI Flags Transparency Concerns as Market-Status Review Looms

Global index provider Morgan Stanley Capital International (MSCI) again has raised concerns about Indonesia's stock market, citing limited visibility in shareholdings and coordinated trading behavior ahead of a high-stakes review of the country’s emerging market status expected next week.

For now, Indonesia remains an emerging market and investors expect it to retain that status.

In its Global Market Accessibility Review, released on June 19, MSCI downgraded the country’s Information Flow assessment from positive to negative.

The findings follow MSCI’s January 2026 warning that Indonesia risked being downgraded to frontier market status unless market accessibility concerns were addressed. That assessment triggered a massive selloff and the stock market has yet to recover.

MSCI said persistent opacity in ownership structures and indications of coordinated trading behavior – known locally as saham saham goreng (stock "frying") – continue to undermine fair price formation and limit investors' ability to accurately assess companies' effective free float.

“In Indonesia, accessibility concerns have arisen from ongoing opacity in shareholding structures and indications of coordinated trading behavior that undermines proper price formation,” MSCI wrote in its report. “These issues materially limit international institutional investors' ability to assess true free float and to rely on observed market prices for portfolio construction and index replication.”

It also noted that detailed market information is not consistently available in English, creating additional challenges for international investors.

Indonesia and Turkey were the only emerging markets to record a deterioration in accessibility assessments during this year's review.

Beyond transparency, MSCI highlighted structural constraints in Indonesia's foreign exchange market, including the absence of an efficient offshore rupiah market and requirements linking foreign exchange transactions to securities transactions. It also cited restrictions on overdraft facilities, securities lending and certain asset transfer mechanisms as factors limiting market accessibility.

Since January, the Indonesia Stock Exchange and financial regulators have introduced a series of reforms, including raising minimum free float requirements to 15 percent, expanding shareholder disclosure obligations, and publishing data on companies with highly concentrated ownership structures. Officials hope the reforms are sufficient to satisfy MSCI.

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Bank Indonesia Raises Key Rate to 5.75 Percent

Continuing its drive to shore up the value of the rupiah, Bank Indonesia (BI) again increased the benchmark interest rate on June 18. The increase is part of a set of measures that include tighter capital controls and higher bond yields.

Following the Bank’s monthly policy meeting, BI Governor Perry Warjiyo announced the 25 basis points (bps) increase in the BI Rate, bringing it to 5.75 percent.

Perry called the measure “pre-emptive,” saying he believes the currency would “become stronger going forward” and “stabilize toward its fundamental [value].”

It is the third rate increase in the last month. At last month’s board of governors’ meeting the rate was increased by 50 bps and that was followed by another 25-bps hike on June 9, after the rupiah hit an all-time low of over 18,000 per US dollar. Taken together, the rate has risen by one percentage point, but the rupiah remains weak, trading on June 18 at 17,867 per dollar.

BI also announced it would seek higher yields on newly issued Bank Indonesia Rupiah Securities (SRBI), which account for a big share of capital inflows.

Perry also announced stricter controls on dollar transactions, with underlying documentation required for any dollar purchase of $10,000 or higher, starting in July. A few months ago, the limit was $100,000.

Permata Bank economist Faisal Rachman told The Jakarta Post on June 18 that tighter capital controls may explain why the rupiah did not strengthen after the rate hike. He said dollar demand might surge before the implementation of the stricter rules but noted that investors were anticipating assessments from global index provider MSCI and ratings agency S&P Global and that uncertainty was “still high.”

“A prolonged period of elevated uncertainty could lead to higher risk premiums on Indonesian financial assets, potentially prompting BI to maintain a tighter monetary policy stance,” said Faisal, adding that another rate hike this year was possible but unlikely.

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B50 Rollout Expect July 1

The government says road trials with a new blend of diesel containing 50 percent palm oil have gone well and Indonesia is on track to introduce the new fuel in about two weeks.

The move to B50 – a mandatory blend of 50 percent palm oil-based biodiesel and 50 percent conventional diesel – is a further step to save money on energy imports. The current B40 blend stands at 40 percent palm oil.

“We have tried using B50 in many types of vehicles, including heavy equipment, ships and trains. The same goes for mining and agricultural equipment,” Energy Minister Bahlil Lahadalia told the press in Jakarta on June 18.

“I’m very optimistic about the B50 official rollout on July 1. We should be able to reduce or even stop importing diesel fuel entirely,” Bahlil said.

Eniya Listiani Dewi, the Ministry’s director general of renewable energy, said B50 would ease financial pressure on the country’s oil palm funding agency (BPDPKS), the body that manages funds collected from export levies to finance the biofuel program and replanting efforts. The current B40 blend requires roughly Rp 47 trillion ($2.6 billion) annually.

“The B50 policy will bring the figure down to Rp 32 trillion,” Eniya said.

The government estimates that the B50 mandate will enable the country to save up to Rp 157.28 trillion in foreign exchange this year alone, a major jump from the Rp 133.3 trillion in foreign exchange savings from biofuels last year.

The government estimates the implementation of B50 can employ over 2 million workers and also reduce greenhouse gas emissions by up to 46.72 million tons of CO2 annually, according to Eniya.

The government has been eagerly awaiting B50 and the urgency grew after the US war on Iran war caused global crude oil prices to rise.

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AI-Based Digital Social Assistance Portal Readied for Indonesia Launch

The government is preparing to launch Perlinsos Digital, a nationwide digital social assistance platform, by the end of the year, marking a major step in Indonesia’s broader government digital transformation agenda. The platform is expected to improve the accuracy of social assistance targeting, reduce administrative inefficiencies and strengthen data-driven policymaking.

Speaking on June 17, National Economic Council Chairman Luhut Binsar Pandjaitan, who also heads the Committee for Digital Government Acceleration, said President Prabowo Subianto is scheduled to review the pilot implementation between July 6 and 9 before approving the national rollout.

Currently being tested in 42 districts and cities across 25 provinces, Perlinsos Digital functions as a portal rather than a standalone app, allowing citizens to apply for social assistance using their National Identity Number (NIK) and biometric facial verification. According to Luhut, nearly 370,000 people have already used the platform.

The system is part of Indonesia’s GovTech initiative – originally launched as INA Digital under former president Joko Widodo in 2024 – which aims to integrate fragmented government databases into a unified digital platform. Perlinsos Digital combines digital identity verification, inter-agency data exchange, and digital payments to streamline welfare distribution.

Officials say the platform could significantly reduce leakage and mistargeting in social assistance programs. Minister of Social Affairs Saifullah Yusuf previously estimated that a fully digital system could generate savings of up to Rp 14 trillion annually, while broader efficiency gains from improved targeting may reach Rp 170-260 trillion over time.

The government has also partnered with technology company GoTo for beneficiary verification and to explore digital aid disbursement through the GoPay digital wallet, supporting efforts to make social assistance distribution faster.

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PLN Faces 20 Million Ton Coal Supply Gap

Indonesia’s State Electricity Company (PLN) is facing a 20-million-ton coal shortfall, with only 134 million tons contracted against its annual requirement of 154 million tons, Energy Minister Bahlil Lahadalia said during a hearing with House of Representative’s (DPR) Commission XII on June 15.

With public attention centered on rolling blackouts in Java and Bali, Bahlil said the outages were caused by technical issues at coal-fired power plants rather than coal shortages. He said domestic supplies remain sufficient under the Domestic Market Obligation (DMO) scheme, with producer assignments already reaching 170 million tons.

Bahlil also said that PLN’s growing need for medium-calorie coal – which has tightened in supply and seen production costs rise – has prompted a government review of DMO prices that producers say no longer reflect current costs. "We are calculating the pros and cons so that PLN is not harmed, but producers are not harmed either," Bahlil said.

The price for power generation is capped at $70 per ton and miners are required to sell 25 percent of their ore domestically.

On June 17, President Prabowo Subianto ordered the formation of a joint monitoring team involving PLN, the Energy and Mineral Resources Ministry, and the Development Finance Comptroller (BPKP) to ensure coal supplies reach power plants.

The issue comes as the government reviews its coal production policy after initially slashing the figure in its 2026 Annual Production Plan (RKAB) to 600 million tons from 817.48 million tons in 2025. The cuts were later withdrawn. As of April, coal production had reached 229 million tons, with 84 million tons allocated to the domestic market and 145 million tons for export, according to Energy Ministry officials.

Institute for Essential Services Reform (IESR) Executive Director Fabby Tumiwa questioned the claim that technical failures alone caused the recent blackouts, and linked the coal shortages to delays in finalizing the 2026 RKAB. “It’s not that there’s no coal, it’s that it’s arriving late. This is what’s causing the stockpiles at the power plants to become critically low,” Fabby said on June 18.

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