Indonesia speeds up stock exchange demutualisation to drive capital market reform

Jakarta: The Indonesian government has decided to accelerate the demutualisation of the Indonesia Stock Exchange (IDX) amid negative market sentiment following index rebalancing and a recent two-day decline in the benchmark Jakarta Composite Index.

"The government wants to fast-track the demutualisation of the exchange to prevent unhealthy market practices," Coordinating Minister for Economic Affairs Airlangga Hartarto said at a press conference on Friday.

Airlangga said demutualisation is an urgent structural reform aimed at strengthening governance in line with international standards and mitigating conflicts of interest at the exchange. He added that the move will be followed by an increase in the minimum public shareholding requirement to 15 percent.

According to Airlangga, the Jakarta Composite Index has begun to recover and return to positive territory amid well-coordinated fiscal and monetary policies, indicating that Indonesia's economic fundamentals remain solid despite recent market volatility.

Rosan Roeslani, chief executive officer of state investment holding Danantara Indonesia, said stronger governance is essential given that state-owned enterprises account for nearly 30 percent of the exchange's market capitalisation, adding that the reform would help boost investor confidence and enhance the credibility of Indonesia's capital market.