S’pore expects all parties to honour commitments, says PM Wong after Indonesia cuts gas exports

Singapore state-owned investment firms GIC and Temasek have categorically denied allegations that they pressured the global index provider MSCI to downgrade Indonesia’s market status. The denials came on Wednesday, October 21, in direct response to claims made by former Indonesian trade minister Muhammad Lutfi. Both institutions stated that the accusations were false and emphasized that their investment strategies are driven by fundamental analysis rather than index classifications. Lutfi, who served as Indonesia’s trade minister until recently, published an Instagram post earlier in the week alleging that Singapore’s sovereign wealth funds orchestrated a scheme to manipulate Indonesian financial markets. He claimed that GIC and Temasek sought to incite market panic and trigger a sharp sell-off in Indonesian equities. According to Lutfi, the goal of this alleged strategy was to acquire shares at discounted prices. He further asserted that the two firms pressured MSCI to threaten a downgrade of Indonesia’s market status to drive prices down. A GIC spokesperson issued a statement rejecting the allegations, stating that claims against the organization and its staff were untrue. GIC explained that its investment decisions are not influenced by index classifications or top-down views of specific markets. Instead, the firm focuses on fundamentals at the company or asset level. The statement noted that GIC has maintained investments in Indonesia for over three decades across various asset classes. It affirmed its intention to continue investing where it identifies good, bottom-up, risk-adjusted opportunities. Temasek offered a similar rebuttal during a press conference held on the same day. Fock Wai Hoong, head of Asia Pacific excluding China and India at Temasek Global Investments, addressed the allegations during the launch of the 2026 e-Conomy SEA report. This report was jointly published by Google, Temasek, and Bain & Company. When questioned about Lutfi’s comments, Fock described the claims as baseless and patently untrue. He stated that no individual from Temasek, whether representing the institution or acting personally, had ever contacted MSCI to influence decisions regarding any exchange in the region. The controversy erupted following an announcement by MSCI last week. The index provider launched a consultation on a proposal to reclassify the MSCI Indonesia Indexes from emerging market status to standalone market status. MSCI classifies equity markets into four tiers: developed, emerging, frontier, and standalone. Its evaluations consider factors such as economic development, liquidity, market size, and accessibility. According to MSCI’s website, a reclassification to standalone status typically occurs due to severe deterioration in market accessibility or size and liquidity. Currently, markets holding standalone status include Argentina, Lebanon, Ukraine, and Jamaica. The market reaction to the MSCI announcement was immediate and volatile. The Jakarta Composite Index plunged as much as 16 percent immediately after the news broke. While the index pared some losses later in trading, it closed around 5,300 points, representing a drop of approximately nine percent from pre-announcement levels. This volatility fueled speculation about external influences on the market, leading to the subsequent allegations by Lutfi. These financial disputes have coincided with rising diplomatic and economic tensions between Singapore and Indonesia. On October 24, the Indonesian government announced it would reduce natural gas exports to Singapore by 31 billion British thermal units per day, known as BBTUD. The reduction takes effect from October 24 and involves gas supplied through pipelines originating in Natuna and Sumatra. Indonesian authorities framed the move as part of President Prabowo Subianto’s administration’s effort to prioritize domestic energy needs amidst growing concerns over energy security. Prime Minister Lawrence Wong responded to the gas export cuts on October 25 during the People’s Action Party conference. He stated that Singapore expects all parties to honor their commitments under existing commercial contracts. Wong noted that most of Singapore’s electricity is generated using natural gas, with a significant portion imported via pipelines from Indonesia. He assured that Singapore’s gas importer would take necessary steps to protect its rights and interests under these agreements. The Energy Market Authority, or EMA, assessed the impact of the export cuts. Based on information from natural gas importers, the EMA determined that the total reduction amounts to 17 BBTUD over a period of 18 days. This figure represents less than two percent of Singapore’s total daily gas demand, which exceeds 1,000 BBTUD. Minister for Energy, Trade and Industry Tan See Leng indicated that the local gas importer, Gas Supply, would engage with its suppliers to determine if a contract breach occurred. If so, the firm would pursue commercial remedies. Gas Supply is a wholly owned subsidiary of Temasek. Tan See Leng left the specifics of contract examination to Gas Supply, noting that the firm would closely review available remedies within the commercial agreements. In his address, Prime Minister Wong highlighted Singapore’s preparations for such supply risks. He pointed to investments in liquefied natural gas terminals, which allow the city-state to import fuel from diverse countries without reliance on pipelines. These facilities provide additional options to manage potential disruptions. Wong also discussed the broader energy landscape, stating that Singapore must look beyond natural gas toward cleaner sources of power capable of providing reliable electricity around the clock. He revealed that the government is seriously studying the potential of nuclear energy. Acknowledging safety concerns related to Singapore’s small size and dense population, Wong insisted that safety must remain the priority. However, he argued that options should not be ruled out solely because they are difficult or controversial. The government plans to conduct an assessment by the International Atomic Energy Agency in 2027. This evaluation will cover 19 critical areas, including nuclear safety, radioactive waste management, and emergency planning, to inform a final decision on deploying nuclear energy. Political opposition in Singapore has weighed in on the unfolding situation. The Workers’ Party expressed regret over Indonesia’s decision to cut gas exports if the measure was prompted by recent unrelated developments. In a statement posted on social media on October 25, the party supported the Prime Minister’s call for honoring commercial contracts. The Workers’ Party emphasized that the sanctity of international commercial contracts, particularly those covering key utilities, is a matter of national importance. While acknowledging that the current reduction in gas exports appears tolerable, the Workers’ Party noted that the episode underscores the importance of diversifying Singapore’s energy supply chains. This concern is heightened by an increasingly unpredictable international environment. The party observed that recent comments by Indonesian officials regarding transboundary haze had become conflated with allegations of a conspiracy involving Singapore’s sovereign wealth funds. Additionally, the party linked these issues to Indonesia’s latest decision to curtail gas exports. Parliamentary records indicate that Singapore has been aware of declining gas supplies from Indonesia for several years. In 2023, Parliament was informed that piped natural gas supplies from Indonesia would decrease starting that year, though consumer electricity supply would not be affected. Members of Parliament have tracked this issue through legislative inquiries. In 2022, Member of Parliament Gerald Giam raised questions about unplanned curtailments of piped natural gas and measures to improve reliability. Then Minister for Trade and Industry Gan Kim Yong responded that contracted volumes were revised annually and had been gradually declining due to depleting supplies from Indonesian gas fields. During the same period, Member of Parliament Louis Chua inquired about the terms and expiry dates of Singapore’s gas supply contracts with Indonesia. Gan declined to disclose specific details citing commercial sensitivities but stated that Singapore would safeguard its energy security by diversifying natural gas sources, including through liquefied natural gas imports from other nations. The Workers’ Party stated that its members have filed questions related to haze for the upcoming parliamentary session and intend to follow up with supplementary questions where appropriate. The party committed to continuing its discourse on energy and economic policies within Parliament.