Indonesia lawmakers vet regulator candidates after market rout shakes investor confidence

Jakarta— Indonesian lawmakers on Wednesday began assessing candidates for senior leadership positions at the country’s financial regulator following a sharp equity market selloff in January that prompted a series of high-level resignations and raised concerns over governance and transparency.

Parliament’s financial commission is reviewing candidates for five key posts at the Financial Services Authority, known locally as OJK, including chair, deputy chair and senior capital market supervisory roles.

The leadership overhaul follows the sudden resignation on Jan. 30 of the agency’s chair, deputy chair, and the chief and deputy chief supervisors of capital markets. The departures came days after index provider MSCI warned it could downgrade Indonesia’s classification to “frontier” market status because of concerns related to transparency and governance in the equities market.

MSCI’s warning triggered a wave of selling that wiped roughly $120 billion from Indonesia’s equity market within days. The pressure intensified after Moody’s downgraded the outlook on Indonesia’s sovereign credit rating.

Authorities have since moved to accelerate reforms aimed at restoring investor confidence. Among proposals put forward by OJK and the Indonesia Stock Exchange is a plan to gradually raise the minimum free float of shares held by public investors in listed companies to 15% over the next three years.

Ten candidates are being considered for the five regulatory posts, including interim OJK chair Friderica Widyasari Dewi and acting capital markets supervisor Hasan Fawzi.

Most nominees come from within OJK as well as from Indonesia’s central bank, the finance ministry and the state deposit insurer, reflecting the government’s effort to maintain continuity while implementing governance reforms.

The parliamentary panel’s selections must still be confirmed by the broader legislature during a vote scheduled for Thursday.

The leadership appointment process has been significantly expedited compared with the usual months-long selection cycle. Authorities said the timeline was shortened in response to ongoing volatility in global financial markets.

Finance Minister Purbaya Yudhi Sadewa said concerns over market stability and geopolitical tensions were behind the accelerated process.

“The situation is shaky. The war affects the markets, oil prices. It speeds up the need for more definitive persons at the OJK,” Purbaya told reporters.