MSCI and the factory that was never built

On 15 October MSCI opened a consultation on moving Indonesia out of its Emerging Markets group. The next day the IHSG fell 11.57 percent, its steepest one-day fall since January 1998. MSCI had already frozen additions of Indonesian stocks from January, and it plans to decide by 30 June 2027.

Most of the commentary is about foreign funds and listed companies. The cost I want to point at lands somewhere else: on mid-sized companies that are not listed at all.

Why an unlisted company feels it

An investor who puts money into a private company plans how to get it out: a listing, or a sale to another company. When the listing route narrows, the investor asks for more of the company for the same money, or waits.

Take a food manufacturer that needs Rp100 billion for a second factory. In a healthy market it might sell 30 percent of its shares for that amount. With the exit narrowed, the same money may cost 40 percent. Many owners will not accept that, so the factory waits, and so do the jobs it would have created. The exchange had targeted 50 listings for 2026; by early October seven companies had listed.

Widen the other doors now

Repairing the market is the core work, and it takes time. In the meantime the other exits can be made wider. The most practical is selling minority stakes to strategic investors: companies in the same industry, Indonesian or foreign, under agreements that set out clearly what each side gets.

Two steps need no decision from MSCI. The investment ministry can match mid-sized companies with strategic investors sector by sector. And owners can prepare now: complete their permits, separate personal and company finances, and get an audit a buyer will trust, before a partner comes asking.

Capital stops only when every other door is closed as well.