Negative Sentiment of IHSG After Ratification of Military Law
Penutupan IHSG pada Jumat, 21 Maret 2025.
The Composite Stock Price Index or IHSG was corrected by 2.14 percent to Rp6,245 at the close of Friday (3/21/2025). There is an assumption that the decline in the last few days was triggered by domestic turmoil, including the ratification of the TNI Bill which caused a wave of demonstrations in various cities.
There must be empirical evidence if we mention the fall of IHSG due to the ratification of the law--of course. However, the ratification gave negative sentiment to the movement of IHSG, in addition to the economic conditions both domestically and globally.
In fact, since the Prabowo-Gibran administration, IHSG has indeed been bleeding. In fact, the Indonesia Stock Exchange had temporarily frozen trading (trading halt) due to the 6.11 percent fall of IHSG, even though all Asian markets were closed in the green zone. The temporary suspension of trading occurred in March 2021 due to the Covid-19 pandemic.
In the midst of such conditions, President Prabowo Subianto's controversial statement actually seems to be biased towards the market. Prabowo does not question the IHSG going up and down because he does not buy shares and what is important is that the free nutritious meal program continues. Many parties regret the statement and seem not to understand the capital market issue.
Stock market observers said that the ratification of the TNI Law has created negative sentiment for foreign investors in the Indonesian capital market. Foreigners interpret the ratification as a signal of military domination over civilian supremacy. News broadcast by influential mass media abroad, none of them positively assess the error of the law.
The government through the relevant ministries certainly cannot ignore the plunge in the IHSG by issuing various statements that the Indonesian economy is fine.
The government's unilateral claim without the support of positive indicators of the economic situation and assessments from independent rating agencies, will not restore investor confidence, especially abroad. All indicators from parties outside the government, one voice says that the Indonesian economy is not doing well.
Ironically, the DPR has not spoken out loudly to criticize the recent state of the Indonesian economy. The Prabowo-Gibran regime has indeed tried to embrace all parties even though not all of them are in the cabinet. Oddly enough, those outside the cabinet have not been heard to voice their criticism as if the economic, political, and social health are indeed fine.
In a situation full of uncertainty like now, collaboration between the government, legislature, and private sector is highly anticipated to maintain economic stability and restore investor confidence. When everything is conducive, even without the President's statement, investors will return to Indonesia and the economy will grow positively.[]
