JAKARTA – President Prabowo Subianto has declared that Indonesia will not be intimidated by global index provider MSCI, amid growing pressure on his government from a regional haze crisis and a sharp stock market sell-off. Speaking at a Cabinet meeting at the Presidential Palace in Jakarta on Oct 21, he accused foreign powers of insulting and interfering with Indonesia.
Prabowo was responding to MSCI’s Oct 15 proposal to strip Indonesia of its emerging-market status and reclassify it as a “standalone” market in 2027. The index provider cited concerns over transparency in share ownership, suspicious trading activity and weaknesses in market oversight.
“We are not afraid. We have strength, we have courage, we are willing to make sacrifices and we do not know surrender,” Prabowo said.
MSCI’s warning triggered Indonesia’s deepest two-day stock market sell-off on record, wiping about US$82 billion in market value before shares recovered some ground on Oct 20. A downgrade could reduce the appeal of Indonesian equities to major international investment funds and potentially lead to large capital outflows.
During the meeting, Prabowo also addressed widespread forest and land fires, saying they were not purely natural and that several corporations bore responsibility. He described deliberate burning as possible “environmental terrorism” and a crime against humanity because it endangered the health of millions.
“If the evidence is clear, we will act. We will revoke all the permits of companies that break the rules,” he said, adding that Indonesia would reveal the companies involved at the appropriate time. He did not identify the firms or countries he referred to.
Prabowo also said “big nations” had meddled in Indonesia since independence, accusing them of inciting division and financing rebellions and riots. He referred to early republican uprisings, including the Republic of South Maluku and PRRI-Permesta, and said many had predicted Indonesia would break apart after the 1997-1998 upheaval.
His comments came as Singapore and Malaysia increased pressure on Jakarta over haze from Indonesian fires. The haze pushed Singapore’s air quality to levels not seen since 2015, closed schools in Kuala Lumpur and several Malaysian states, and caused flight cancellations in Indonesia and neighbouring countries.
Singapore’s Minister for Sustainability and the Environment Grace Fu said investigations indicated that some haze over Singapore originated from fires on land held by seven Indonesian companies. The National Environment Agency later issued notices to three additional companies, bringing the total to 10, under Singapore’s Transboundary Haze Pollution Act.
At home, Prabowo has faced calls to name firms linked to the fires. Parliament’s agriculture and forestry committee deputy chairman Alex Indra Lukman urged the government to release its data, citing findings by Walhi and Greenpeace Indonesia that reportedly linked 52 companies with foreign capital to the fires.
An Oct 5 report by Greenpeace Indonesia, Greenpeace Malaysia and peatland-monitoring group Pantau Gambut linked at least one Malaysian company and four concessions with Singapore-based firms to land containing hotspots, but did not accuse them of starting the fires.
Fires across Sumatra and Kalimantan, worsened by a strong El Nino, have sent haze across the region.