As concerns about market integrity grow, Indonesia faces the potential risk of being kicked out of global stock indices. MSCI said that the country no longer has the status of an emerging market, which has exacerbated the threat of foreign capital flight. The index provider is currently negotiating a proposal to reclassify Indonesia as an “independent market.” MSCI said that if it were only downgraded to a “frontier market,” it would not be enough to reflect the severity of the country's market problems. Unless MSCI discovers clear evidence of substantial improvements in market governance and operations, it is expected to move forward with this change. Although the Indonesian authorities have announced relevant reform measures, MSCI said in a statement on Thursday: “Major concerns about market malfunctions remain, including ongoing suspected collaborative transactions, and lack of substantial evidence of effective enforcement.”

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