Indonesia’s sovereign wealth fund Danantara has committed to investing $5 billion in domestic companies over the next six to nine months, its chief investment officer, Pandu Sjahrir, said on October 12. This pledge comes amid MSCI’s recent proposal to downgrade Indonesia from emerging-market to standalone status, a move that triggered an 11.6% drop in the Jakarta Composite Index, according to fortune.com.
Danantara, launched by President Prabowo Subianto in 2025, aims to support and stabilize the Indonesian stock market by focusing on fundamentally strong local businesses. Speaking at the DBS Asia Future Forward Conference in Singapore, Sjahrir emphasized the fund’s role in backing healthy companies and expressed confidence in their growth prospects. The sovereign wealth fund’s investment plan was announced before MSCI’s downgrade proposal on October 15, which has since pressured market sentiment.
The MSCI downgrade would remove Indonesian stocks from its emerging and frontier market indices, potentially causing global funds to reduce exposure to the country. Indonesia has until April 2027 to implement reforms to avoid this status change. Despite the setback, Indonesia recently maintained its Secondary Emerging status in FTSE Russell’s annual review. The Jakarta Composite Index has fallen over 40% this year, highlighting the market volatility amid these developments.
Danantara’s $5 billion investment commitment represents a strategic effort to bolster Indonesia’s capital markets and support local companies through this period of uncertainty. The fund’s activities over the coming months will be closely watched as the country navigates the implications of MSCI’s proposed reclassification.