JAKARTA: Global index provider MSCI was trying to "intimidate" Indonesia, but the country would not be afraid, President Prabowo Subianto told his Cabinet on Wednesday in his first public response to last week's downgrade warning.
MSCI stepped up pressure on Jakarta by announcing that it could downgrade Indonesia's equities to "standalone" market status, saying the country had not done enough to crack down on coordinated trading practices in its stock market.
The surprise announcement triggered a record two-day stock market rout, with a downgrade threatening to cause massive capital flight and cut the US$1.5 trillion G20 economy off from major emerging market index flows.
"The MSCI... intended to intimidate us," Prabowo told a gathering of his Cabinet in a speech broadcast on the government's official YouTube channel.
"I simply say to MSCI: the Indonesian nation fears no one and will not be cowed," he said, adding that the country possessed strength and courage, was willing to make sacrifices and refused to surrender.
In an emailed response to a request for comment, MSCI said its decisions followed transparent and rules-based methodologies.
"MSCI will continue to monitor developments in the Indonesian market and engage with market participants and authorities," it said.
Prabowo, a former special forces commander, has often used strongly nationalist language since coming to power in 2024, suggesting that foreign powers were determined to destabilise Indonesia, the world's largest Muslim-majority country and a global commodities powerhouse.
His speech on Wednesday also referred to outside interference in Indonesia, although he did not elaborate.
Other senior Indonesian political figures have also reacted strongly to MSCI's warning.
On Tuesday, former Indonesian trade minister M. Lutfi claimed on his Instagram account that Singapore sovereign wealth funds Temasek and GIC were involved in pressuring MSCI to issue the warning to Indonesia.
An official from Temasek described Lutfi's comments as "patently untrue", while GIC also rejected the allegation, DealStreet Asia reported on Wednesday.
Last week, senior economic minister Airlangga Hartarto also said there was "a big question mark" over why MSCI had not discussed the possible downgrade during meetings with Indonesian officials in Bangkok just days earlier.
Hanif Dhakiri of the National Awakening Party, who sits on the parliamentary committee overseeing finance affairs, called for MSCI's methodology to be transparent, objective and consistently applied across countries.
"We should not be defensive in the face of criticism, but neither should we accept judgements without examining their basis and objectivity," he told Reuters.
Said Abdullah, a lawmaker from the opposition PDI-P party, said on Sunday that Indonesia should take MSCI's concerns seriously, but argued that the index provider's judgements should not be beyond scrutiny.
"MSCI's executives are not prophets delivering divine revelations, like apostles writing sacred texts, who can claim a monopoly on flawless truth," he said.
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