28 September 2026
Executive Summary
Indonesia has changed the rules used by its stock exchange to identify companies presenting heightened financial or legal risk, increasing the focus on corporate fundamentals, bankruptcy and debt restructuring.
The Indonesia Stock Exchange introduced revised criteria for its special watchlist board today.
The system identifies listed companies meeting specified risk criteria.
Under the revised framework, the exchange has removed several criteria relating primarily to share price, liquidity and the number of shares available for public trading.
Instead, important fundamental criteria remain, including:
- Whether a company can generate revenue.
- Financial performance.
- Bankruptcy proceedings.
- Debt restructuring.
- Legal circumstances affecting the company.
The changes form part of broader reforms intended to improve transparency, liquidity and price discovery within Indonesia’s capital markets.
For businesses dealing with counterparties, the development reinforces an important principle: financial distress should be assessed through the company’s underlying fundamentals rather than simply its share price.
UK Impact
UK companies trading with Indonesian businesses may have exposure through:
- Customers.
- Suppliers.
- Joint ventures.
- Distributors.
- Contractors.
- Trade-credit arrangements.
- Investments.
- Receivables.
Indonesia is Southeast Asia’s largest economy and an important supplier of commodities, manufactured goods and industrial materials.
Counterparty deterioration can therefore create exposure well beyond investors holding Indonesian shares.
Global Impact
Indonesia has been reforming its capital markets following concerns from international index providers regarding transparency.
MSCI is expected to report the outcome of its assessment of those reforms in November.
The latest change places greater emphasis upon the financial and legal condition of individual companies.
That is particularly relevant where companies face:
- Weak revenues.
- Refinancing difficulties.
- Debt restructuring.
- Bankruptcy proceedings.
- Legal disputes.
Those factors may affect suppliers and customers before a business actually fails.
Our View
Companies should use the development as a reminder to examine counterparty financial health continuously rather than only when onboarding a customer or supplier.
Businesses should ask:
- When was the counterparty last credit checked?
- Is revenue growing or declining?
- Is the company profitable?
- Is cash generation deteriorating?
- How much debt is approaching maturity?
- Has borrowing increased?
- Are suppliers being paid more slowly?
- Has trade-credit insurance changed?
- Are credit limits being reduced?
- Has the company entered restructuring discussions?
- Are legal proceedings outstanding?
- Have directors recently changed?
- Has an auditor resigned?
- Are accounts being filed late?
- Is the business dependent upon one lender?
- What would happen to us if the company failed tomorrow?
Businesses should also avoid relying too heavily upon market value.
A falling share price can indicate concern, but market prices can move for many reasons.
Conversely, a relatively stable share price does not guarantee that a company’s underlying financial position is sound.
The more useful indicators often sit inside:
- Cash flow.
- Debt maturity.
- Working capital.
- Payment behaviour.
- Banking relationships.
- Legal filings.
This is particularly important for companies extending substantial unsecured credit to customers.
Counterparty risk should be monitored while the company is still trading normally — not after it stops paying its bills.
Risk Indicator: ELEVATED – INDONESIA, CORPORATE CREDIT & COUNTERPARTY RISK
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The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
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