Emerging Markets Disclosure Project – Indonesia
As a G20 economy and the largest economy in ASEAN Indonesia is one of the important emerging markets countries in the world. It has abundant resources, a successful track record in export markets and a large domestic market that is increasingly consumption driven. Despite international crises, GDP growth has been steady and poised to pick up. The challenge for the country will be to achieve balanced and inclusive growth and also ensure that resource based sectors do not end up further aggravating an already fragile environment.
The country suffered a severe political and economic crisis in 1997/98 when several instances of corporate malpractices were brought to light. In the aftermath of the crisis regulations were tightened and financial sector reform made a priority by the government. Development and strengthening of capital markets has been an area of focus and considerable progress has been made. The Indonesian Stock Exchange or IDX continues to expand with new listings both from the public and private sector. Apart from large foreign and domestic institutional investors there are special plans for improving access for retail investors who are driving the rapid growth of the mutual funds industry.
To reduce concentration risk and vulnerability to short term speculative movements, IDX needs to attract more long term funds and responsible investors. These institutions typically factor Environment, Social and Governance (ESG) criteria into their investment decisions. It is therefore vital that listed companies are able to demonstrate higher and improving standards of disclosure. To study this trend and to also assess the importance given to ESG by the financial sector including banks, IndonesiaWISE and UN Principles of Responsible Investment (PRI) are co-leads in a multi stakeholder initiative researching trends in key emerging markets. For further details please contact information@indonesiawise.com.
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