Indonesia Is Positioned to Shrink Its AUM Gap and Accelerate Market Transformation

JAKARTA, Investortrust.id — Indonesia is far closer to a capital-market breakthrough than its modest AUM figures imply. Speakers at the Investortrust Capital Market Forum 2025 said Thursday that despite total industry assets of just US$55 billion — smaller than the top two fund managers in Thailand — Indonesia can still engineer a rapid scale-up by boosting liquidity, strengthening transparency, and expanding retail participation in line with the government’s goal of lifting market capitalization to 120 percent of GDP by 2045.

Despite Indonesia’s relatively small asset-management industry, UBS Investment Banking Managing Director Ranju Parambi told the audience that the country has every structural ingredient needed to engineer a rapid shift similar to India’s own acceleration. He stressed that India’s rise from a modest equity market to a US$5 trillion powerhouse did not occur over generations.

“India’s big quantum leap didn’t take 20 or 30 years,” Parambi said. “It happened in five to seven years. Indonesia can absolutely compress its own transformation into a similar window.”

His optimism aligned with the government’s ambition. Arief Wibisono, Senior Advisor to the Minister of Finance for Financial Services and Capital Markets, reiterated the official target of lifting market-cap-to-GDP from roughly 50 percent today to 120 percent by 2045, a scale similar to India’s current ratio.

“This is an ambitious target, but it is achievable,” Arief said. “A strong, efficient, and inclusive financial sector is not optional — it is the engine of Indonesia Emas 2045.”

Arief added that the government is pushing reforms to improve the financial sector’s structure, strengthen intermediation, and expand technological capacity, warning that Indonesia cannot achieve growth aspirations “without a financial system that genuinely serves the real economy.”

AUM Gap Shows Why Indonesia Lacks Market Depth

Parambi warned that Indonesia’s total assets under management — about US$55 billion — remain smaller than the second-largest asset manager in Thailand. He explained that the narrow base of long-term domestic investors, rather than foreign sentiment alone, is what limits liquidity and weakens Indonesia’s weight in global indices.

He pointed out that global asset allocators, including those in New York and London, evaluate markets by depth, transparency, and ease of execution. When Indonesia’s AUM is lower than a single manager in Thailand and far below the industry levels of Malaysia or the Philippines, global funds naturally treat Indonesia as an insufficiently deep market.

“If entrepreneurs cannot raise equity, the IPO pipeline dries up,” Parambi said. “A liquid market requires domestic savings flowing into equities, and that is where Indonesia still has enormous room to grow.”

Transparency First, or Retail Investors Will Not Stay

Kartika Sutandi, Chief Marketing Officer of Jarvis Asset Management, argued that Indonesia’s biggest near-term opportunity lies in restoring retail investors’ ability to participate safely and profitably. She said retail investors often cannot access the same information or resources as institutions, making fair participation difficult.

“We need liquidity and transparency,” she said. “Retail investors cannot compete with institutions on fundamentals, so they need tools and visibility. If retail investors can make money, liquidity increases — and only then will foreign institutions come.”

Kartika highlighted the impact of full call auction (FCA) rules, which force certain stocks to trade through an auction session when volatility or regulatory concerns arise. While intended as a safeguard, she said FCA has the unintended effect of killing liquidity in stocks that were previously trading normally.

She also pointed to Indonesia’s declining presence in MSCI indices, global benchmarks used by institutional investors to allocate capital. When Indonesian stocks fall out of MSCI, foreign inflows drop, valuations weaken, and liquidity declines further.

“If we want to reach 120 percent market cap to GDP, we need more Indonesian companies included in global benchmarks — not fewer,” she said.

Entrepreneurs Cannot Scale Without Equity Markets

Parambi stressed that Indonesia will not achieve its 8 percent growth aspiration — the government’s long-term target — unless entrepreneurs are able to scale. Banks alone cannot provide the risk capital needed to build innovative businesses, and without an active equity market, founders face financing dead ends.

“Entrepreneurs cannot rely only on bank loans,” he said. “A thriving equity market is essential for risk-taking, job creation, and real economic growth.”

He added that Indonesia’s slowdown in IPO activity reflects a deeper confidence issue: founders do not see public markets as a reliable partner unless liquidity improves and valuations become more stable.

A Market Approaching a Turning Point

Despite these concerns, Parambi emphasized that Indonesia is far from a stagnant market. He noted that the country has the population scale, digital adoption, exchange infrastructure, and regulatory interest to succeed. What Indonesia still lacks, he said, is the mobilization of domestic savings into professionally managed equity vehicles.

Arief echoed that sentiment, saying the Ministry of Finance views capital markets as a central instrument for reaching Indonesia’s 2045 vision.

“The sector must be efficient, inclusive, and technologically advanced,” Arief said. “The state cannot achieve this alone. Industry, academia, and investors must all participate.”

Parambi closed on an optimistic note, arguing that Indonesia’s transformation is not only feasible but within reach if reforms continue.

“If we deepen liquidity, strengthen transparency, and grow long-term investing, everything else will follow,” he said. “Indonesia has the potential — now it needs the momentum to unlock it.”