Indonesia’s planned overhaul of capital market rules could trigger a large wave of new share supply, with the Indonesia Stock Exchange (IDX) estimating roughly 187 trillion rupiah would need to be made available to meet a higher minimum free-float requirement.
The government has proposed lifting the minimum publicly held free float for listed companies to 15% from the current 7.5% - a change prompted in part by a warning from index compiler MSCI in late January that the country risked a downgrade to frontier-market status as early as May because of concerns over market opacity and potential price manipulation. An IDX assessment as of the end of 2025 indicates 267 companies, out of more than 900 listed on the exchange, would be required to change their ownership structures.
IDX director I Gede Nyoman Yetna quantified the potential impact: assuming none of the affected firms choose to delist, the cumulative amount of equity they would need to offer to the public comes to 187 trillion rupiah, equivalent to $11.08 billion at the exchange rate cited in the assessment.
Market participants and analysts caution that the success of the reform will depend heavily on its design and execution. Liza Camelia Suryanata, head of research at Kiwoom Sekuritas Indonesia, argued that a properly structured move to 15% free float could significantly improve the quality and attractiveness of Indonesia’s capital market. At the same time, she warned that implementation insensitive to liquidity dynamics and price stability could undercut investor confidence by producing short-term volatility.
How many companies and which names are most affected
The IDX analysis identifies a wide range of companies that would need to increase the proportion of shares available to public investors. Leading the list by required supply is Barito Renewables Energy, the exchange’s largest company by market capitalisation, whose controlling shareholder would have to sell more than $1.8 billion in shares to reach the 15% threshold. Other large potential offerings in Reuters’ analysis of public data include:
- Bank Permata - approximately $450 million in new shares, with majority ownership held by Bangkok Bank;
- Hanjaya Mandala Sampoerna - around $420 million, controlled by Philip Morris International;
- Bank Syariah Indonesia - about $350 million in potential new share supply;
- Trimegah Bangun Persada - roughly $230 million, associated with tycoon Lim Hariyanto’s nickel business.
Requests for comment to these companies were not answered.
Timing and transition considerations
The interim head of the Financial Services Authority’s capital market supervision, Hasan Fawzi, has signalled that affected companies could be granted a three-year window to comply, although final details have not yet been released. Analysts stress that such a transition will test not only corporate willingness to adjust ownership but also the market’s capacity to absorb a significant volume of additional shares without destabilising prices.
Gilman Pradana Nugraha, executive director of the Indonesian Issuers Association, noted that raising free float is not merely a technical corporate action. He said firms must consider strategies that preserve valuation and stock-price stability; a timeline that is too compressed, he warned, could spark unwanted selling pressure.
An unnamed stock trader echoed that concern, observing that while raising free float advances transparency, the market’s ability to absorb the increased supply is uncertain - ‘‘The supply of shares will increase but will investor demand also increase?’’ the trader asked, declining attribution because they were not authorised to speak publicly.
Measures proposed to help create demand
Policymakers are already outlining steps intended to bolster demand for the extra equity. Proposals include raising the equity investment cap for insurance companies and pension funds to 20% - more than double the existing limit - to allow institutional buyers to take larger positions. The sovereign wealth fund Danantara has also pledged to deploy its $14 billion pool to purchase listed shares, and Indonesia’s social security fund, BPJS Ketenagakerjaan, which manages in excess of $53 billion in assets, has been pointed to as another potential source of buying power.
Domestic retail investors may also help absorb supply: retail trades accounted for half of the daily average trading volume of 18 trillion rupiah in 2025, underscoring the significance of individual investors to market liquidity. Bernadus Wijaya, chief executive of brokerage Sucor Sekuritas, said that if MSCI maintains Indonesia’s ‘‘emerging market’’ classification in May, returning foreign investors could also help mop up additional shares.
Broader market integrity and remaining challenges
While a higher free-float minimum would increase the proportion of shares available to public investors, several analysts emphasised that the ultimate test of reform will be enhancements to market supervision, ownership transparency and trading integrity - not merely numerical changes to ownership thresholds. The spotlight on Indonesia’s alleged ‘‘goreng-goreng saham’’ or ‘‘stock frying’’ practices - referring to efforts to pump up prices - has sharpened following MSCI’s warning.
Some market observers also caution that even after meeting the 15% free-float rule, ownership concentration in certain firms could remain substantial if new public holdings are dispersed among a small set of buyers or if controlling shareholders retain close operational and strategic control.
What this means for investors and specific sectors
At a sector level, financials - including banks and insurance - will be directly implicated given the names and the role of institutional investors in absorbing new supply. Consumer staples, exemplified by tobacco firm Hanjaya Mandala Sampoerna, and natural resources and commodities, such as nickel-related businesses, are likewise among those facing tangible equity releases. The reform’s wider aim is to improve market quality and attract longer-term capital, but its near-term effect could include heightened volatility and valuation pressure if demand fails to match the expanded free float.
As regulators finalise the implementation mechanics and timelines, market participants will be watching closely for measures that balance increased transparency with steps to preserve orderly trading and investor confidence.
Currency reference used in calculations: $1 = 16,885.0000 rupiah.