It is assumed that rising ethnic and religious tensions in Indonesia (brought on by the blasphemy trial of Basuki Tjahaja Purnama, the Christian, ethnic Chinese Governor of Jakarta) contributed to JP Morgan's double downgrading of Indonesia.

The termination of cooperation between the Indonesian government and JP Morgan implies that the "perception bank" status of JP Morgan in Indonesia has been revoked and therefore it cannot provide any services within the largest economy of Southeast Asia anymore, including the underwriting of bonds (JP Morgan is a traditional underwriter for Indonesian government global bonds).

It is not the first time that the Indonesian government clashes with JP Morgan. In August 2015 former Finance Minister Bambang Brodjonegoro ventilated its anger at the New York-headquartered multinational banking and financial services firm after it advised investors to reduce government bonds exposure in Indonesia. At that time the Indonesian rupiah was very vulnerable due to China's devaluation of its yuan. At that time Agus Martowardojo, Governor of Bank Indonesia, stated that JP Morgan spread panic in the country.

Although JP Morgan is a bank that has been involved in a series of controversial affairs during its existence (and it failed to give a detailed explanation for Indonesia's double downgrade), we believe that Indonesian government officials should not react excessively when international institutions become less positive about Indonesia's economic and fiscal fundamentals because such reactions could undermine investor confidence in the professionalism of government officials.