{"text":[[{"start":9.32,"text":"Global index provider MSCI was “unfair” and went “a bit too far” by threatening to expel Indonesia from its indices, one of the country’s most influential tycoons has said."}],[{"start":20.4,"text":"Hashim Djojohadikusumo, President Prabowo Subianto’s brother and one of his closest advisers, told the FT that Indonesia merits a higher classification than the “standalone” status MSCI warned of last month."}],[{"start":34.56,"text":"The threatened downgrade, which MSCI linked to concerns over stock manipulation and a lack of meaningful enforcement, would rank Indonesia alongside countries such as Zimbabwe, Nigeria and Argentina."}],[{"start":46.32,"text":"“They do have a case that if Indonesia expects portfolio investors to really invest in the Indonesian stock market and the capital markets, that it has to be in a transparent market, that there have to be best practices,” Hashim said. “But to go down to standalone, I think they went a bit too far.”"}],[{"start":63.52,"text":"Indonesia’s stock market is already the world’s worst performer this year, shedding 40 per cent as it suffered multiple MSCI warnings and concerns over Prabowo’s policies."}],[{"start":73.52,"text":"A downgrade to standalone status, which is two levels below its current “emerging market” ranking, would remove south-east Asia’s largest economy from all of MSCI’s main indices and force funds that track them to dump Indonesian stocks. Others could also reduce stakes. Goldman Sachs has estimated outflows of more than $5bn."}],[{"start":null,"text":"
"}],[{"start":92.92,"text":"Hashim, whose Arsari Group has interests in mining, energy and commodities, said a downgrade would result in “serious consequences” and could also affect the rupiah currency. No Asian country is classified as a standalone by MSCI, which assesses market accessibility and investability. A decision is due by June 2027."}],[{"start":112.68,"text":"MSCI first warned of a possible downgrade to “frontier” status in January, but Hashim said Indonesia was “blindsided” by the threat to go a step further last month, which caught foreign investors by surprise and drew criticism."}],[{"start":125.24,"text":"He said MSCI had raised concerns about a lack of criminal prosecutions and exorbitant valuations, which are seen by market participants as evidence of price manipulation. Investors have also complained about opacity and concentration of shareholdings."}],[{"start":139.6,"text":"“The key is to enforce the securities law. It’s obvious that many of these individuals or companies have committed actions which warrant stronger action,” Hashim said."}],[{"start":150.2,"text":"Asked if Indonesia would pursue tycoons whose stocks have been suspected of price manipulation, Hashim said: “I think the government will do whatever it has to do to maintain the integrity of the market, of the Indonesian economy.”"}],[{"start":162.56,"text":"Jakarta has already unveiled a series of market reforms this year, including tightening free-float requirements and excluding stocks with concentrated ownership from its flagship index."}],[{"start":172.96,"text":"Asked to respond to Hashim’s comments, MSCI said market participants had indicated that “sufficient progress has not been observed consistently across the Indonesian equity market”."}],[{"start":183.36,"text":"“Despite the announced reforms, significant concerns remain around market dysfunction, including continued suspected co-ordinated trading behaviour and a lack of evidence of meaningful enforcement,” MSCI said."}],[{"start":null,"text":""}],[{"start":195.52,"text":"Prabowo is also grappling with declining popularity, criticism of his signature welfare policies and, more recently, an emerging rift in his coalition."}],[{"start":204.76,"text":"His flagship plan to provide free meals to schoolchildren and pregnant mothers nationwide at a cost of $12.5bn has been beset by incidents of food poisoning and allegations of corruption."}],[{"start":215.88,"text":"Hashim said while the pace of the meals programme rollout could be slowed, its scale should not be cut back given the importance to Indonesia of reducing stunting, a condition of impaired growth in children."}],[{"start":226.24,"text":"“We all recognise that it was very badly managed. But the programme is going to stay,” he said."}],[{"start":232.48,"text":"He also dismissed concerns over Indonesia’s fiscal strength given Prabowo’s populist policies and the country’s longstanding difficulty boosting tax revenue. Indonesia’s tax-to-GDP ratio is 12 per cent, below the Asia-Pacific average of 19.5 per cent, according to the OECD."}],[{"start":250.56,"text":"Hashim said the government would raise that level to 18 per cent in three years, pointing to digitalisation to boost revenue. He has also previously proposed taxing Indonesia’s large informal sector."}],[{"start":261.72,"text":"He also argued that Indonesia remained a favourable destination for strategic and foreign investors, despite concerns in financial markets. Recent government data shows that investment realisation in the third quarter rose 7.6 per cent to Rp528tn ($29bn)."}],[{"start":279.68,"text":"“There’s a huge interest in spite of the MSCI downgrading [threat],” he said. “Indonesia will survive.”"}],[{"start":280.18,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":296.36,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794103419_1249.mp3"}