AmCham Update Vol. 7 #107

Prabowo Rejects MSCI ‘Intimidation,’ Indonesia Weighs Halting Natural Gas Exports to Neighboring Countries, BI Holds Rate Steady and Pursues Growth, Confining Data Centers to Industrial Estates is Unwise Says Business, Services Committee Meeting, Big Country Needs a Big Gov’t: Prabowo, New Financial Welfare Council Created

Oct 23, 2026

Prabowo Rejects MSCI ‘Intimidation’ after Market Downgrade Threat

President Prabowo Subianto has strongly denounced the threat last week by index provider MSCI to downgrade the country’s equities market to standalone status while Danantara and financial regulators move to support the market and strengthen oversight.

In his first public reaction to the warning, Subianto told the cabinet on Oct 21 that MSCI was attempting to “intimidate” Indonesia. “I simply say to the MSCI: the Indonesian nation fears no one and will not be cowed,” he said. “We possess strength, we have courage, we are willing to make sacrifices, and we refuse to surrender.”

Financial Services Authority (OJK) Chair Friderica Widyasari Dewi said Subianto’s remarks were not intended to challenge MSCI, but reflected the government’s commitment to strengthening Indonesia’s capital market. Indonesia Stock Exchange (IDX) Director Jeffrey Hendrik similarly said global index providers operate independently.

Former Trade Minister M. Lutfi alleged on Instagram that Singaporean sovereign wealth funds Temasek and GIC had pressured MSCI to issue the warning in order to acquire strategic assets in Indonesia at lower prices. Temasek rejected the allegation as “patently untrue.”

Meanwhile, Danantara’s Chief Investment Officer Pandu Sjahrir said the investment fund would continue buying shares with attractive valuations. “We are always profit-oriented. We see that from the risk-reward perspective, it's looking good now,” Pandu said on Oct 22.

Danantara Managing Director for Global Relations and Communications Pahala Mansury added that the fund invests through professional investment managers and does not select individual shares.

Regulators have also intensified enforcement. OJK imposed fines totaling Rp 2.1 trillion ($117 million) on Oct. 21, its largest-ever sanctions, in connection with trading violations involving Dian Swastatika Sentosa, Barito Renewables Energy, and Petrindo Jaya Kreasi.

The largest fine, Rp 1.5 trillion ($83.3 million), was imposed on a company identified as SMT for allegedly orchestrating market manipulation involving Dian Swastatika shares.

OJK found that parties controlling shares in Barito Renewables and Petrindo had obtained large allocations by disguising their identities, concentrating ownership and limiting the shares available for public trading. Both companies are controlled by businessman Prajogo Pangestu, the founder of Barito Pacific Group.

The actions come as Indonesian authorities seek to address the transparency and governance concerns underlying MSCI’s warning while stabilizing investor confidence following the recent market sell-off.

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Indonesia Weighs Halting Gas Exports to Neighbors

Coordinating Downstreaming and Energy Transition Minister Bahlil Lahadalia has said Indonesia is in “survival mode” and must prioritize natural gas for the domestic market to the exclusion of exports to neighboring countries.

“So, if other countries have different expectations of us, they should be careful. I am even considering not renewing gas export contracts with neighboring nations. We are in survival mode. After all, we must first meet our own domestic requirements,” Bahlil said at the Presidential Palace in Jakarta on Oct 21, as reported by Kompas.com.

Bahil said other ministries would follow the same approach.

He also said that President Prabowo Subianto has ordered significant austerity measures for the state budget. “We truly must focus on survival. As state officials, with the President leading the way, every ministry will definitely be able to translate the President’s vision into concrete programs aimed at ensuring our survival,” Bahlil said.

It was a day of tough words from the government aimed in different directions. On the lingering forest fires, Subianto said that companies from neighboring countries found to be responsible for the plague of fires could lose their operating permits. He also denounced market index provider MSCI over its recent threat to downgrade Indonesia’s equity market to standalone status over governance issues.

Indonesia exported 7.1 million metric tons of liquefied natural gas (LNG) in 2025, with Japan, China and Singapore the three largest customers, according to Statistics Indonesia (BPS).

Speaking at the plenary cabinet meeting on Oct 21, the President said the traditional international order has effectively been dismantled, creating a perilous situation. Bahlil echoed Subianto’s assessment, suggesting that “only the strong would prevail.”

The government has not elaborated on how gas exports might be halted. Indonesia also imports refined petroleum products from Singapore. BPS statistics show that Singapore was Indonesia's primary source of oil and gas imports from January to May, with an accumulated value of $5.1 billion.

A disruption of the bilateral energy trade could also impact upstream operations at Indonesian gas fields should Indonesia's domestic pipeline infrastructure prove to be insufficiently developed to absorb and distribute gas volumes currently intended for export. Longstanding reliance on imported petroleum products from Singapore could mean that abruptly cutting exports might carry significant economic risks.

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BI Holds Rate Steady, pushes Liquidity Expansion for Growth

Bank Indonesia (BI) left its benchmark interest rate unchanged at its monthly two-day meeting and emphasized the need to push for growth through increased liquidity.

At a press conference on Oct 21 following the policy meeting, BI Governor Destry Damayanti said the BI Rate would remain at 5.75 percent, where it has been since June.

To spur growth, the Bank also announced a reduction in the statutory reserve requirement, or the minimum amount of funds banks have to deposit at BI to cover their liabilities and ensure liquidity. BI will cut the current 9 percent reserve requirement by 2 percentage points in stages; down to 8 percent next month and then 7 percent in December. This will provide the market with an estimated Rp 190 trillion in fresh liquidity, according to Destry.

She also noted that military tensions in the Middle East keep pushing the price of oil higher, thus increasing inflationary pressures. For these reasons, she said, the tight monetary policy environment was set to last longer around the world.

The decision comes a week before the US Federal Reserve should announce its rate policy Oct 27-28. CME Group’s FedWatch Tool said it anticipated a 25-basis point (bps) increase in December and most traders think the Fed will hold steady this month.

Destry said maintaining stability “is still our priority,” either by keeping inflation in check or guarding the rupiah against volatility, which ultimately would result in inflation. Following last week’s turmoil in the Indonesian stock market over the threat of a down grade by MSCI, the rupiah was trading on Oct 23 at about 18,087.50 to the US dollar.

Bank Danamon lead economist Irman Faiz wrote in an analysis on Oct 21 that the policy package would “buy time but does not eliminate the possibility of a BI rate hike.” He believes the rate could eventually reach 6.25 percent.

“Persistent rupiah depreciation, weaker external financing, rising inflation expectations or greater reserve pressure would strengthen the case for a rate increase,” said Irman.

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Business Says Don’t Confine Data Centers to Industrial Estates

The data center industry is not happy about a government plan to confine new facilities to industrial estates, fearing it could raise costs and limit options as demand surges due to artificial intelligence.

The industry is asking the government to avoid a blanket rule, saying some data centers need to be closer to end users, according to the Indonesia Data Center Ecosystem Council (IDCEC).

Forcing development into industrial estates could cause “operational disruptions and risks to security and service continuity,” IDCEC chairman Nawi Jaya told The Jakarta Post on Oct 19.

Companies operating internal data centers worry that the proposal could force them to move facilities away from existing offices or operational sites, he added.

The Industry Ministry has proposed requiring data centers to be built within industrial estates, arguing that it would improve coordination.

But industry players say a one-size-fits-all approach would overlook differences in data center scale and function. “Industrial estates should be promoted as competitive priority locations but should not be the only option for all types of data centers,” said Indonesia Data Center Provider Organization (IDPRO) chairman Hendra Suryakusuma on Oct 22, as quoted by Kontan.

Indonesia is among the world’s 15 largest data center markets and hosts more than 200 data centers, from conventional facilities to massive operations run by tech giants including Google, Amazon Web Services and Microsoft, according to Data Center Map.

The country’s installed capacity stands at about 468 megawatts (MW), with more than 1.5 gigawatts (GW) under construction and another 4.6 GW in the pipeline, according to property consultancy Cushman & Wakefield.

Data centers guzzle power and require extensive cooling systems, potentially intensifying competition for electricity and clean water in areas where infrastructure is already stretched.

Earlier this month, the West Java government suspended construction of a data center campus being developed by Singapore-based BDx Data Centers in Jatiluhur, citing concerns over outstanding environmental and building approvals. In Batam, rapid expansion has sparked local protests over pressure on limited water supplies.

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Services Committee Meeting hears Views on Business Climate

AmCham Indonesia held its fifth Services Committee meeting of 2026 at the American Club on Oct 21, chaired by Governor Emeritus Peter Meyer. The meeting brought together members from across the services sector to exchange views on current business conditions, regulatory developments, and issues affecting their operations in Indonesia.

The discussion also covered recent AmCham policy and advocacy activities, including developments on mandatory halal certification, Extended Producer Responsibility (EPR), the new Labor Law, and the 2026 US-Indonesia Investment Report. Members were also updated on upcoming AmCham activities and events, including AmCham’s Career Connect 2026 event and annual Thanksgiving Golf Tournament.

During the committee’s regular temperature take on the business climate, sentiment is still tilted toward negative, with 7 positive votes, 9 neutral votes, and 8 negative votes. The results reflect continued uncertainty among services-sector companies regarding the current business environment.

Prabowo Says a Big Country Needs a Big Cabinet

President Prabowo Subianto has defended the size of his cabinet and broad governing coalition, as the expanding number of presidential advisors faces a legal challenge in the Constitutional Court.

Speaking at a cabinet meeting marking the second year of his administration on Oct 21, Subianto argued that the size of the government is justified by the country’s population and territory, comparing it with Europe’s multiple national governments. “Europe has 30 governments, 30 finance ministers, 30 military commanders, 30 attorney generals and 30 police chiefs. Indonesia has one cabinet... Where is the inefficiency?” he said.

Subianto praised his ministers’ performance and defended his big coalition of political parties, saying national unity was necessary due to rising global instability. He also suggested that further cabinet changes are possible, comparing ministers to soccer players who may be rotated in and out of the lineup.

Meanwhile, the number of presidential advisors is facing scrutiny. On Oct 16, law graduate Muhamad Riziq Maulana petitioned the Constitutional Court to challenge Article 7(1) of the 2024 Presidential Advisory Board (Wantimpres) Law, which removed the nine-member limit originally established in 2006. The petition argues that the absence of a ceiling could allow the president to appoint advisors without sufficient justification and increase government spending.

“The government already employs ten presidential special advisors, whose responsibilities are not that different from members of the advisory board,” Maulana said in his petition. “This brings the total number of people advising the President to 36. This goes to show that there is no real urgency to allow the Wantimpres membership to remain unlimited.”

Maulana argued that restoring the nine-member limit would balance the need for expertise with fiscal efficiency and prevent excessive concentration of political support. Each advisor receives around Rp 76.5 million ($4,327) per month.

Constitutional law expert Herdiansyah Hamzah of Mulawarman University said the growing number of Wantimpres members reflected the wide composition of the president’s administration. “He is effectively held hostage to the need to provide some form of offer or compensation to his numerous supporters. One way is to place them in a position on the Wantimpres,” he said on Oct. 21.

Wantimpres Secretary Muhammad Qodari said the board would “follow closely the development of the case at court.”

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Prabowo Launches Financial Welfare Council

In his latest move to expand the use of advisory councils, President Prabowo Subianto launched a national financial welfare council on Oct 22 to improve the financial health of Indonesian families.

The National Council for Financial Welfare (DNKK) was launched during the 2026 National Coordination Meeting of Regional Financial Access Acceleration Teams (TPAKD) at the Jakarta International Expo in Kemayoran, Central Jakarta.

Chief Economic Affairs Minister Airlangga Hartarto said the council has an expanded mandate that shifts the government’s emphasis beyond such things as bank account ownership toward improving overall financial conditions at the family level.

“When we talk about the macroeconomy, what the president is launching here is the economy of each family. The smallest economic unit in our society is the family,” Airlangga said.

The DNKK operates directly under the president, with Airlangga serving as executive chair. Financial Services Authority (OJK) chief Friderica Widyasari Dewi, Bank Indonesia Governor Destry Damayanti, Home Affairs Minister Tito Karnavian and Finance Minister Suahasil Nazara are executive deputy chairs.

Friderica said the council was established in response to the president’s desire to see families improve their welfare.

Overall financial well-being includes the ability to manage daily expenses, build savings, access financing and withstand unexpected financial shocks.

The DNKK is one of several national advisory and policy bodies operating under the current administration, alongside the Presidential Advisory Council (Wantimpres), chaired by Pratikno, and the National Economic Council (DEN), led by Luhut Binsar Pandjaitan.

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Merck Sharp & Dohme (MSD)is an innovative biopharmaceutical company headquartered in Rahway, New Jersey. MSD has a strong presence in Indonesia, focusing on three key therapeutic areas: Oncology, Vaccines and Hospital & Acute Care. MSD develops innovations to address some of the greatest challenges to people’s health and well-being around the world and works to expand access to its medicines and vaccines in Indonesia.

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Donna Priadi and written by the AmCham Staff.

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