Indonesia’s capital market weakness does not fully reflect the country’s underlying investment picture as foreign direct investment continues to flow into the economy, Indonesia Investment Authority (INA) CEO Oki Ramadhana said at DealStreetAsia’s Asia PE-VC Summit 2026 in Singapore last week.
Ramadhana said Indonesia received about $21.4 billion in foreign direct investment last year which, he noted, was probably the second-highest level in Southeast Asia after Singapore.
“That’s why I say you have to write more about this,” Ramadhana said, arguing that the capital market and the real economy can tell different stories.
“There could be a disconnect between capital markets and the real sort of FDI.”
He said investors looking only at capital market movements could miss opportunities in the wider economy, where infrastructure, manufacturing and other businesses continue to require capital.
“If we’re looking at the long term, this is where the money will pay off,” he said.
Valuations diverge from fundamentals
The gap is also visible in equity valuations. Indonesia’s equity market has historically traded at around 17 times earnings, but recently fell below 12x and at one point was closer to 10x, according to Ramadhana.
He said many companies have retained their underlying fundamentals despite the lower valuations.
Ramadhana pointed to Kalbe Farma as an example, saying the listed state-owned healthcare company had previously traded at around 27 times earnings but is now valued at roughly 9-10x.
“The fundamental is still there,” he said, contrasting the current environment with the COVID19 period, when valuations had also fallen but corporate fundamentals were weaker.
The valuation gap is one reason he expects investor momentum to return as Indonesia works through changes in its investment and capital-market environment.
“If you look at Indonesia, one thing that hasn’t happened in the past is growth,” Ramadhana said, pointing to the government’s efforts to accelerate economic growth beyond the roughly 5% pace Indonesia has maintained for much of the past two decades.
He said investors should look beyond short-term market conditions and assess Indonesia’s longer-term trajectory.
“We ask them not to view Indonesia as a snapshot, but as a series of developments over time.”
Three areas need fixing
Ramadhana said Indonesia still needs to address three areas to translate investor interest into more capital: governance and institutionalisation, regulatory predictability and the capital market.
The first concerns businesses seeking institutional capital. Indonesia has plenty of opportunities, including scalable businesses, but some still need to improve governance, financial transparency and management before they can become investable, he said.
“There are a lot of opportunities out there in Indonesia … but a lot of those opportunities are still to work out in terms of the governance,” Ramadhana said. “Some of them are actually not investable.”
He also said investors need greater certainty around the regulatory environment when making decisions with longer investment horizons.
The third issue is the capital market itself.
“You will not get money into Indonesia … if we don’t get the capital markets right,” he said, adding that work is already underway to address liquidity and other weaknesses; for instance, liquidity, transparency and free-float reforms as part of efforts to improve the exit environment for investors.
Ramadhana said the government’s current reform efforts could make the next two years an important window for Indonesia.
“I think two years is a very good window for the government to achieve what they have and what they are actually doing.”
The point is not that all risks have disappeared. Rather, he said, investors need to distinguish between short-term market conditions and the longer-term investment case.
He cited Indonesia’s history of navigating economic crises as part of that argument, saying the country has remained relatively stable and resilient through different periods of disruption.
For INA, a stronger capital market would also provide more options for investors to exit private market investments. The fund does not operate with a fixed holding period and can hold investments for 10 years or longer when necessary, according to the earlier DealStreetAsia interview.
Ramadhana said the fund can also help foreign investors navigate Indonesia’s public and private sector ecosystem and assess opportunities beyond short-term market movements.
“Again, if you look at Indonesia only as today, you may have differently than if you have strong conviction in the long term,” he said.
