JPMorgan insisted on Tuesday that its business in Indonesia continue to operate as usual following a decision by Indonesia’s Finance Ministry to terminate its partnership with the investment bank after JPMorgan came up with a report that purportedly created negative sentiment toward Indonesia.
JPMorgan head of communications for Southeast Asia Li Anne Wong told The Jakarta Post the impact of the issues was minimal.
“Our business in Indonesia continues to operate as usual. The impact on our clients is minimal and we continue to work with the Ministry of Finance to resolve the matter.”
In a letter issued by the Finance Ministry to JPMorgan Chase Bank N.A., a subsidiary of US-based investment giant JPMorgan Chase, dated on Dec. 9, 2016, the ministry stated that the recommendation given by the bank on its research report could hamper stability in the country’s financial system.
In the report, JPMorgan’s emerging market equity strategist downgraded Indonesia — by two notches — from overweight to underweight in mid-November.
“The Finance Ministry in turn ended partnership contracts with JPMorgan Chase Bank, N.A.; to become effective starting on Jan. 1.,” Marwanto Harjowiryono, the ministry’s director general of treasury, told the Post.
With the contract termination, the government will no longer place its state revenue transfers and transactions with the bank.
The sanction for JPMorgan is not without precedent. In August 2015, the Finance Ministry sanctioned the bank after it moved Indonesian government bonds to “underweight” from “overweight”. The government did not detail the sanctions. (ren)