Why MSCI’s Request Matters for Indonesia’s Stock Market Credibility

By Kusnandar & Co. Attorneys At Law – Jakarta, Indonesia

 

The recent request by MSCI, one of the world’s most influential index providers, for greater transparency in Indonesia’s stock ownership data should not be viewed as a mere technical issue. Instead, it reflects a deeper concern about the credibility, governance, and reliability of Indonesia’s capital market in the eyes of global investors. MSCI’s call for the Financial Services Authority (OJK) to disclose beneficial ownership (ultimate beneficial owner/UBO) data, including holdings below five percent, is a clear signal that transparency has become a non-negotiable standard in today’s global financial ecosystem.

 

This issue gained prominence following a sharp decline in Indonesia’s stock market, which even triggered a temporary trading halt. Market participants linked the volatility to MSCI’s assessment of Indonesia’s free float quality and ownership transparency—two critical indicators used to evaluate market investability. When investors are unable to clearly identify who ultimately controls listed shares, uncertainty increases. For global institutional investors, such uncertainty often translates into higher risk premiums or even capital withdrawal.

 

In this context, OJK’s response—committing to provide beneficial ownership data to MSCI, starting with major index constituents such as the IDX100—deserves recognition. The move signals that Indonesian regulators are willing to align with international best practices rather than adopt a defensive stance. Transparency is no longer just about regulatory compliance; it is about maintaining credibility in an increasingly competitive global capital market.

 

However, the decision to open beneficial ownership data also comes with significant challenges. Beneficial ownership information is inherently sensitive, as it reveals control structures that are often deliberately complex. In many cases, layered ownership is not only a business strategy but also a means of protecting privacy and commercial interests. Therefore, OJK must strike a careful balance between meeting global transparency standards and safeguarding legitimate data protection concerns. Transparency should strengthen trust, not create new vulnerabilities.

 

Beyond the immediate issue, MSCI’s request exposes a broader structural question: how mature is Indonesia’s capital market governance framework? While regulations on free float and disclosure already exist, MSCI’s concerns suggest that the available data may not sufficiently reflect the true ownership landscape. This highlights a gap not in regulation alone, but in data quality, consistency, and accessibility—factors that increasingly define a market’s standing at the international level.

 

The discussion around raising the minimum free float requirement to 15 percent further reinforces this point. If implemented effectively, such a policy could improve market liquidity, reduce price manipulation risks, and enhance overall market resilience. More importantly, it would signal that Indonesia is moving beyond symbolic reforms toward substantive improvements in market structure. For long-term investors, this kind of reform matters far more than short-term market fluctuations.

 

At the same time, the strong market reaction to MSCI’s assessment serves as a reminder of how interconnected Indonesia’s capital market is with global perceptions. MSCI’s influence is significant; its evaluations can affect portfolio allocations worth billions of dollars. Speculation about a potential downgrade in market classification—even if unlikely—illustrates how governance issues can quickly escalate into reputational risks if not addressed decisively.

 

Ultimately, OJK’s willingness to engage with MSCI on beneficial ownership transparency should be seen as a strategic opportunity. By improving disclosure standards and data integrity, Indonesia can strengthen investor confidence, reduce volatility driven by uncertainty, and enhance its position within global capital flows. The challenge lies in execution: transparency must be implemented carefully, consistently, and credibly. If done right, this moment could mark a meaningful step forward in Indonesia’s journey toward a more trusted and globally competitive capital market.

By : K&Co - January 30, 2026

Beyond Audits : Purbaya’s Hard Line on Tax Evasion and Illegal Economies

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

Finance Minister Purbaya Yudhi Sadewa’s decision to involve the Indonesian National Armed Forces (TNI) and the National Police (Polri) in dismantling protection networks (bekingan) behind tax evaders and illegal economic actors is a bold and noteworthy move. At a time when the government is under pressure to strengthen state revenue, this initiative signals that taxation is no longer treated merely as an administrative matter, but as a serious law-enforcement and governance issue with strategic implications.

 

For years, weak tax realization has often been attributed to high tax rates or low compliance awareness among taxpayers. Purbaya’s statement, however, exposes a deeper and more uncomfortable reality: the core problem lies not only with tax evaders themselves, but with systemic protection networks that allow them to operate with impunity. This is not a technical problem; it is an issue of institutional integrity that has long undermined the effectiveness of Indonesia’s fiscal policy.

 

The collaboration between the Ministry of Finance and state security institutions marks a paradigm shift in tax enforcement. It reflects a transition from routine audits and administrative sanctions toward a firmer, more comprehensive legal approach. Such a strategy aligns with broader anti-corruption efforts, which recognize that entrenched illegal practices can only be dismantled through cross-institutional cooperation capable of cutting off political, bureaucratic, and security backing.

 

This approach is particularly relevant in sectors such as illegal cigarette production and distribution, which has caused significant revenue leakage for years. In these cases, the presence of organized protection often renders conventional enforcement ineffective. Purbaya’s willingness to confront these interests suggests political courage — a readiness to disrupt long-standing arrangements and challenge powerful actors who have thrived in regulatory gray zones.

 

However, boldness alone will not guarantee success. The initiative faces serious structural challenges that must be addressed if it is to deliver lasting results. First, involving TNI and Polri should not be reduced to ad-hoc joint operations. It requires clear legal frameworks, precise division of authority, and disciplined coordination between fiscal authorities, law enforcement, and intelligence units. Past experience shows that coercive measures without strong institutional reform often produce only short-term gains, while leaving underlying problems intact.

 

Second, efforts to dismantle bekingan networks demand a high level of transparency and accountability. Public trust will hinge on whether enforcement is conducted consistently and without favoritism. If operations appear selective or politically motivated, public skepticism will grow, and the initiative risks being dismissed as rhetorical rather than transformative. Clear procedures, evidence-based actions, and external oversight are therefore essential.

 

Equally important is internal reform within the Ministry of Finance itself. Restructuring personnel in the Directorate General of Taxes and Customs is a necessary step, but it is not sufficient on its own. A deeper reform agenda must focus on strengthening internal controls, minimizing opportunities for data manipulation, and fostering a culture of integrity. Without this, external enforcement will merely compensate for weaknesses that should have been resolved internally.

 

Ultimately, the success of Purbaya’s strategy will be measured by public confidence. When citizens see that tax enforcement is fair, firm, and free from hidden protection, voluntary compliance is likely to improve. In that sense, tax reform is not only about boosting revenue, but about reinforcing the legitimacy of the state itself.

 

In conclusion, Purbaya’s decision to involve TNI and Polri sends a powerful signal that the government is serious about confronting long-standing obstacles to fiscal reform. Yet, this strategy will only succeed if it is accompanied by transparent implementation, strong inter-agency coordination, and sustained institutional reform. If these conditions are met, Indonesia may be entering a new chapter in credible and effective tax governance.

By : K&Co - January 28, 2026

Weather Modification and Jakarta’s Floods: A Helpful Tool, Not a Silver Bullet

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

Jakarta’s perennial flooding problem has once again pushed emergency responses into the spotlight. This time, Governor Pramono Anung’s claim that weather modification operations (OMC) can help suppress flooding has sparked renewed public debate. By intervening in rainfall patterns before extreme downpours reach the capital, the city government hopes to reduce flood risks during peak rainy periods. While the approach reflects a proactive use of technology, it also raises important questions about effectiveness, sustainability, and public expectations.

At first glance, weather modification sounds like a bold and modern solution. In simple terms, the operation aims to disperse rain clouds before they reach Jakarta by inducing rainfall over the sea or less vulnerable areas. If successful, this would reduce rainfall intensity over the city, easing pressure on rivers, drainage systems, and floodgates. From a crisis-management perspective, such measures appear reasonable—especially when meteorological forecasts predict prolonged heavy rainfall.

Indeed, past experiences suggest that weather modification can reduce rainfall intensity under certain conditions. Several operations in recent years have reportedly lowered precipitation levels in the Greater Jakarta area for limited periods. These outcomes support the governor’s argument that OMC can serve as a short-term mitigation tool, particularly when time is critical and conventional infrastructure responses are insufficient.

However, effectiveness is only one side of the equation. Weather systems are inherently complex and influenced by global and regional atmospheric dynamics. No weather modification effort can guarantee precise outcomes, especially during extreme climate events. When rainfall exceeds predictions or weather patterns shift unexpectedly, OMC’s impact may be minimal. This uncertainty means that weather modification should never be portrayed as a definitive solution to Jakarta’s flooding.

More importantly, floods in Jakarta are not caused by rainfall alone. Decades of rapid urbanization, inadequate drainage capacity, land subsidence, shrinking green spaces, and poor river management have turned heavy rain into a recurring disaster. Even if rainfall intensity is reduced, water will still accumulate if it has nowhere to go. Framing weather modification as a central solution risks oversimplifying a deeply structural problem.

There is also a political and social dimension to consider. Public communication matters. When authorities highlight advanced technologies, expectations can rise quickly. If floods persist despite weather modification efforts—as they likely will—public trust may erode. Citizens may perceive such measures as symbolic or even cosmetic, especially if they are not accompanied by visible improvements in infrastructure and long-term planning.

This does not mean weather modification should be dismissed altogether. On the contrary, it can be a useful component of an integrated flood mitigation strategy. In emergency situations, reducing rainfall by even a small margin can buy valuable time for pumps, reservoirs, and evacuation efforts. As a supplementary tool, OMC has its place.

Ultimately, the real test of Jakarta’s flood policy lies beyond the clouds. Sustainable solutions require consistent investment in drainage systems, river normalization, green open spaces, coastal protection, and stricter land-use regulations. Climate adaptation strategies must also account for rising sea levels and land subsidence, challenges that no amount of weather modification can fix.

In this context, Governor Pramono’s weather modification initiative should be viewed as a tactical response—not a strategic cure. Technology can help manage risk in the short term, but long-term resilience depends on structural reform and urban planning. Jakarta does not need miracles from the sky; it needs firm solutions on the ground.

By : K&Co - January 27, 2026

Beyond Symbolic Diplomacy: Why Restoring Indonesia’s National Parks Truly Matters

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The recent meeting between Indonesian President Prabowo Subianto and King Charles III of the United Kingdom is more than a moment of high-level diplomacy or a ceremonial exchange between two leaders. Behind the handshakes and formal smiles lies an important commitment: cooperation to improve and restore 57 national parks across Indonesia. In an era marked by climate change, biodiversity loss, and increasing ecological disasters, this agreement carries significance far beyond international protocol.

 

National parks are often viewed as protected spaces reserved for conservationists, researchers, or tourists. In reality, they are essential life-support systems. Indonesia’s national parks protect watersheds, regulate climate, preserve biodiversity, and sustain the livelihoods of millions of people living around them. When these ecosystems are degraded, the consequences are immediate and far-reaching—floods become more frequent, droughts intensify, wildlife disappears, and communities lose their sources of food, water, and income.

 

The commitment to restore 57 national parks sends an important message: environmental protection is no longer a side issue but a central pillar of national and international policy. King Charles III, long known for his environmental advocacy, brings moral authority and global attention to this effort. For Indonesia, partnering with the United Kingdom strengthens not only technical capacity but also international credibility in conservation efforts.

 

What makes this cooperation particularly meaningful is that it goes beyond abstract promises. Several conservation initiatives are already underway, including ecosystem restoration in areas such as Way Kambas National Park, which plays a critical role in protecting endangered Sumatran elephants. There is also attention to forest and landscape restoration in Aceh, reinforcing the idea that conservation must be grounded in real, measurable actions—not just diplomatic statements.

 

However, optimism should be accompanied by realism. Restoring national parks is not merely about funding or foreign partnerships. It requires strong governance, consistent law enforcement, and meaningful involvement of local communities. Without transparency and long-term commitment, even well-funded programs risk becoming temporary projects that fail to address structural problems such as illegal logging, land encroachment, and weak oversight.

 

This is where the broader meaning of the Prabowo–Charles meeting becomes clear. The agreement reflects a growing recognition that environmental protection is inseparable from social stability and economic resilience. Healthy ecosystems reduce disaster risks, support sustainable tourism, and provide long-term economic benefits that far outweigh short-term exploitation. In this sense, conservation is not an obstacle to development—it is a prerequisite for it.

 

Equally important is the role of communities living near national parks. Conservation efforts that exclude local voices often fail. Restoration must go hand in hand with improving livelihoods, respecting indigenous knowledge, and ensuring fair access to resources. When people see tangible benefits from conservation, they become its strongest defenders.

 

At a global level, this partnership also highlights the importance of shared responsibility. Climate change and biodiversity loss do not respect national borders. Cooperation between countries—especially those with historical, economic, and political influence—can help set stronger global standards for environmental governance.

 

Ultimately, the agreement to improve 57 national parks should not be remembered as a diplomatic headline, but as a turning point. Its success will be measured not by official statements, but by healthier forests, cleaner rivers, protected wildlife, and safer communities. If implemented with integrity and consistency, this cooperation could serve as a model for how diplomacy can move beyond symbolism and contribute meaningfully to the protection of our shared planet.

 

Protecting nature is not an act of charity toward the environment—it is an investment in humanity’s future.

By K&C - January 22, 2026

Money Changer Searches and the Integrity Test of Customs Law Enforcement

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The recent searches conducted by the Attorney General’s Office at several money changers in major shopping centers across Jakarta, in connection with the alleged corruption case involving the export of palm oil mill effluent (POME) at the Directorate General of Customs and Excise, mark a significant development in Indonesia’s anti-corruption enforcement landscape. This move reflects an increasingly assertive approach by law enforcement authorities, not only in uncovering acts of corruption but also in tracing the flow of illicit funds that arise from such crimes.

 

From a legal standpoint, the searches indicate that investigators are extending their focus beyond the alleged abuse of authority in export facilitation to the downstream financial transactions that may constitute money laundering. The seizure of funds in Singapore dollars and the indication that certain Customs officials personally exchanged cash without using identification suggest deliberate efforts to conceal the origin of illicit proceeds. Such conduct, if proven, would demonstrate a conscious attempt to circumvent both criminal law and financial regulatory safeguards.

 

Equally concerning is the alleged collusion between public officials and money changer operators. The practice of currency exchange without customer identification directly violates the principles of know your customer (KYC) and anti-money laundering (AML) compliance that underpin the integrity of the financial system. Money changers are not merely commercial entities; they serve as critical gatekeepers in preventing the circulation of proceeds of crime. When these obligations are ignored or intentionally bypassed, money changers risk becoming active facilitators rather than neutral service providers.

 

This case also highlights a deeper, structural problem within the governance of customs administration. Allegations that the funds originated from “the proceeds of crimes committed by several companies” underscore the persistent and unhealthy nexus between certain segments of the business community and public officials. Corruption in export-related processes not only distorts fair competition but also undermines state revenue and environmental governance, particularly in sectors linked to natural resources. For corporations, short-term gains achieved through bribery or illicit facilitation ultimately translate into long-term legal, financial, and reputational risks.

 

Although the Attorney General’s Office has yet to name suspects, the breadth of investigative actions—ranging from searches at the Customs headquarters to the residences of officials in Jakarta and other regions—demonstrates a methodical and evidence-based approach. The reliance on electronic evidence and financial trails is particularly important to ensure that prosecutions, when initiated, are grounded in solid proof rather than speculation or public pressure. This careful approach is essential to uphold due process while maintaining public confidence in the justice system.

 

Nevertheless, enforcement alone will not suffice if systemic vulnerabilities remain unaddressed. The POME export case should serve as a catalyst for broader institutional reform. Strengthening internal controls within Customs and Excise, enhancing transparency in export approval mechanisms, and ensuring strict supervision of financial service providers—including money changers—are critical steps to prevent similar cases from recurring. Regulatory bodies must also ensure that AML and KYC obligations are not treated as mere formalities, but as enforceable standards with real consequences for non-compliance.

 

Ultimately, the true measure of success in this case will not be limited to convictions or asset seizures. It will depend on whether the state can effectively dismantle the networks that enable corruption and money laundering to thrive. The searches of money changers represent an important starting point. The challenge ahead lies in ensuring that the legal process proceeds transparently, professionally, and consistently, while also driving meaningful reforms that restore public trust and reinforce the rule of law.

By : K&C - January 21, 2026

 

A Weakening Rupiah, Ministerial Optimism, and the Legal Test of State Policy Credibility

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The rupiah’s depreciation toward the psychological level of IDR 17,000 per US dollar is not merely an economic issue. It represents a serious test of the credibility of fiscal and monetary policymaking within Indonesia’s legal framework. Finance Minister Purbaya Yudhi Sadewa’s assertion that the rupiah’s weakness is temporary and will soon reverse due to improving fundamentals and foreign capital inflows deserves rigorous scrutiny—not only from an economic standpoint, but also from the perspective of constitutional law and public finance governance.

 

Executive Optimism Versus the Principle of Fiscal Prudence

 

Normatively, Article 23 of the 1945 Constitution of Indonesia mandates that state finances be managed in a responsible, transparent, and accountable manner for the greatest prosperity of the people. When the 2025 state budget deficit reaches 2.92 percent of GDP, approaching politically and economically sensitive thresholds, market anxiety is neither irrational nor speculative—it is a rational response to perceived fiscal risk.

 

In this context, government optimism that relies heavily on a record-high Composite Stock Price Index (IHSG) and the expectation of foreign inflows risks undermining the prudential principle that lies at the core of public financial law. The legal framework governing state finances does not permit policy decisions grounded in hopeful projections alone; it requires certainty, discipline, and policy consistency.

 

Central Bank Independence: More Than Mere Speculation

 

Minister Purbaya’s dismissal of concerns linking the rupiah’s depreciation to rumors surrounding the potential appointment of Thomas Djiwandono as Deputy Governor of Bank Indonesia (BI) must be examined through a legal lens. Law No. 23 of 1999 on Bank Indonesia, as amended, unequivocally guarantees the independence of the central bank from government and political influence.

 

However, financial markets do not operate on statutory assurances alone; they react to perceptions of institutional risk and conflicts of interest. When an individual with close familial ties to the President is rumored to be positioned for a strategic role within the central bank, investor unease is not a personal attack—it is a question of good governance and the rule of law. In administrative law, the principle of freedom from conflicts of interest is not merely ethical guidance but a prerequisite for the legitimacy of public policy.

 

To underestimate this sensitivity is to underestimate the legal importance of central bank independence itself.

 

Global Pressures Do Not Eliminate the State’s Legal Responsibility

 

It is undeniable that escalating geopolitical tensions, renewed trade wars, and the strengthening of the US dollar as a safe-haven asset have placed significant pressure on emerging market currencies. Yet from a legal-economic perspective, external shocks cannot serve as a justification for weak domestic policy responses.

 

The state—through the government and Bank Indonesia—bears a legal obligation to maintain monetary and fiscal stability. When extensive stimulus measures have already been deployed yet markets remain skeptical about the economy’s growth trajectory, the core issue lies not in the volume of intervention but in the clarity, coherence, and credibility of policy design and implementation.

 

The Rupiah and a Crisis of Legal Confidence

 

The current weakness of the rupiah reflects more than currency market volatility. It exposes a broader crisis of confidence in Indonesia’s legal and institutional economic framework. As long as government responses emphasize political reassurance over structural fiscal reform, strengthened governance, and uncompromising respect for central bank independence, the rupiah will remain vulnerable to both domestic and global shocks.

 

In a state governed by the rule of law, economic stability is not built on rhetoric. It is secured through legal certainty, fiscal discipline, and institutional integrity. Absent these foundations, optimism risks becoming little more than a fragile political narrative—easily dismantled by market realities.

By : K&Co - January 20, 2026

Waiting Too Long After the Disaster

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

Nearly two months after floods and landslides struck Aceh, North Sumatra, and West Sumatra, hundreds of thousands of people are still living in evacuation camps. They survive in temporary tents with very limited conditions. Time keeps moving forward, but a decent life has not yet arrived for them. Natural disasters may come suddenly, but slow and weak responses cannot continue to be justified.

According to data from the National Disaster Management Agency (BNPB) as of January 16, 2026, a total of 166,579 people remain displaced. This number shows how serious and unresolved the situation is. Children are getting sick more often, adults are exhausted, and many families are losing hope. The government is indeed building temporary shelters, but the progress is far from enough. Out of nearly 28,000 proposed units, fewer than 1,000 are ready to be occupied. This gap between need and reality is too large to ignore.

Not all survivors live in official evacuation camps. Some choose to stay with relatives because it feels safer. However, these people often receive even less attention. Because they are not registered as camp residents, they do not receive cash assistance from the government. Yet their daily needs do not disappear. They still need money for food, medicine, electricity, and their children’s needs. The state seems to only recognize visible suffering, while hidden hardship is left unattended.

The government says it is racing against time to complete the construction of temporary shelters. The goal is to reduce overcrowding in evacuation camps and provide healthier living conditions. However, the reality on the ground tells a different story. Thousands of families are still waiting without certainty. The target to finish the shelters before Ramadan only highlights how unprepared the system remains in responding to post-disaster recovery.

Life in the evacuation tents is far from comfortable. During the day, the heat is unbearable; at night, the cold becomes a problem. Many displaced people spend their days looking at the remains of their destroyed homes. Roofs are gone, walls have collapsed, and the houses are no longer livable. They know they cannot return, but they also do not know where to go next.

This situation is not only about natural disasters, but about state responsibility. When citizens are forced to live in tents for months, it reflects a failure in emergency and recovery management. Government efforts should be acknowledged, but they are meaningless if the results are not felt by the people.

The state must be present more quickly and more seriously. Children who are falling ill, families who have lost their homes, and citizens living without certainty cannot be asked to be patient forever. Disasters may be unavoidable, but prolonged suffering should never be.

By : K&Co - January 19, 2026