section_path: Impacts/Market crash
section_name: Market crash
paragraph_text: Market crash
  
  In March 2025, Indonesia's financial markets faced a severe jolt as the Jakarta Composite Index (JCI) plunged by over 7% in a single trading session. This sharp intraday decline—recorded on 18 March—was the steepest since 2011. The plunge triggered an automatic 30-minute trading halt as markets faced a decline of 6.146% during closure at around 9:37 AM, a mechanism designed to stabilize markets at 5% during periods of excessive volatility. After a 30 minute halt, trading resumed but the index continued to decline, reaching a 7.1% drop at one point. The sharp decline in Indonesia’s stock market quickly rippled across other sectors, with technology and manufacturing companies posting the biggest losses. Shares of DCI Indonesia, a leading provider of data center infrastructure, plunged around 20 percent, falling to 115,800 rupiah (approximately $7). Meanwhile, Chandra Asri Pacific, a major player in energy and chemicals, saw its stock price drop nearly 19 percent by the afternoon. During trading, foreign investors made a net sell of IDR 2.48 trillion, continuing the trend of outflows totalling IDR 29.41 trillion since the beginning of the year. Foreign ownership in the JCI also fell to 2.9%, the lowest since 2011, reflecting a decline in global interest in the Indonesian market. This contrasted with other Asian bourses that rallied. The negative market sentiment was fuelled by concerns over national economic conditions. The sudden downturn reflected a deepening crisis of investor confidence, rooted not only in macroeconomic uncertainties but also in political anxieties and shifting fiscal policies under President Prabowo Subianto’s administration. In February alone, the state budget (APBN) recorded a deficit of IDR 31.2 trillion, while the consumer confidence index and savings ratio fell, indicating weak purchasing power. Layoffs increased, with major factories such as Yamaha and PT Sanken Indonesia closing. Tax revenue also weakened, with Income Tax 21 falling 39.5% YoY and IPR declining by 0.5% signalling consumption pressure. Systemic risk looms over the capital market, given the potential impact on the financial sector.
  
  Although macroeconomic factors and controversial fiscal policies of the Prabowo Subianto administration were the main culprits, public discourse and political debates also highlighted the revision of the TNI Law (RUU TNI) as a factor that worsened market sentiment. According to a Tempo report, economist from CELIOS, Nailul Huda, stated that the decline in the JCI has been occurring since 14 March, and the TNI bill is one of the triggers. He highlighted concerns that the military's expanded role in the civilian and economic spheres could lead to legal uncertainty, erode meritocracy, and cause investor fear. One example is the appointment of an active military officer as President Director of Perum Bulog, which fuelled perceptions of military intervention in the business sector. Deputy Chairman of Commission I of the House of Representatives Budi Djiwandono immediately reassured and denied that the TNI Bill was the direct cause of the JCI crash, asserting that there are no articles in the revised draft that explicitly regulate the placement of active TNI officers in state-owned enterprises. On the other hand, economists such as Wijayanto Samirin cited the revision of the TNI Law as one of the five factors that caused the market crash, citing public concerns over the potential return of ABRI's dual function. This view reflects the market's sensitivity to the issue of militarisation, even if only as a perception.
  
  The response from Indonesian authorities was swift but indicative of broader systemic stress. The Financial Services Authority (OJK) introduced temporary measures allowing publicly listed firms to buy back shares without requiring prior shareholder approval—a move aimed at supporting valuations and signaling confidence. Concurrently, Bank Indonesia intervened in the foreign exchange market to stabilize the rupiah, deploying a combination of rate tools and reserves. These interventions did moderate the pace of capital outflows but did little to resolve the underlying concerns surrounding fiscal direction and political stability.