OJK Deputy Commissioner Nurhaidi, who is in charge of monitoring Indonesia’s capital market, said that the institution is still discussing several details such as the percentage of foreign assets that is allowed to be included in the portfolios. This matter needs careful attention as it will impact on local assets. Indonesian investment companies had requested for the new regulation due to the shallowness of Indonesia’s capital market (compared to Singapore and Malaysia) amid the introduction of the government’s new universal pension program (BPJS Ketenagakerjaan). Since 2014, Indonesian workers (numbering about 100 million) are required to pay five percent of their salary to the pension program.

“This new program implies that Indonesia can expect to see a huge flow of funds in the years ahead and which - potentially - can cause a bubble in prices of Indonesian assets,” said Michael Tjoajadi, President Director of Schroder Investment Management Indonesia (subsidiary of the British independent international asset management and private banking group). Currently, the government’s pension fund BPJS Ketenagakerjaan controls about IDR 187 trillion (USD $15 billion) in assets.

There are presently 508 Indonesian companies listed on the Indonesia Stock Exchange (IDX), with a total market capitalization of IDR 5.171 trillion (USD $414 billion), or, roughly equal to half of the country’s gross domestic product (GDP). As such, Indonesia lags behind its regional peers Malaysia (906 listed companies with a combined market capitalization that is equal to 88 percent of Malaysia’s GDP) and Singapore (775 listed companies, equal to 150 percent of Singapore’s GDP).