JAKARTA, Jan. 4 (Xinhua) -- The Indonesian government has terminated all of its business deals with the U.S.-based JP Morgan Chase Bank NA following the latter's bad assessments on Indonesian sovereign bonds.
The bank has served as Indonesia's primary bond dealer.
In its research note issued on Nov.13 that envisioned global economy situation after the election of Donald Trump as the next U.S. president, JP Morgan downgraded the Indonesian equity market by two notches from "overweight" to "underweight".
The note issued by JP Morgan triggered potential investors to reconsider their plans to invest in Indonesia's U.S. Dollar and Euro-denominated bonds, thus making Indonesia suffer from losses, according to Indonesian financial ministry.
Robert Pakpahan, director general for Budget Financing and Risk Management at the financial ministry, confirmed on Tuesday that the ministry had stopped using JP Morgan's services as a primary dealer and an underwriter for Indonesian sovereign bonds, saying that the assessment issued by JP Morgan in November was neither accurate nor credible.
The ministry has sent a letter to JP Morgan, notifying the suspension of the cooperation with the bank days after the bank issued its research note, he said.
Commenting on cooperation suspension with JP Morgan, Indonesian Finance Minister Sri Mulyani said that Indonesia is always open to critics and assessment.
"It is very important for us to improve. But as a credible bank, it (JP Morgan) has a big responsibility in developing positive psychology in the market. It, instead, created a misleading opinion," the minister said, adding that there was no point to preserve a non-mutually beneficial partnership with the bank.
JP Morgan has been serving as the Indonesian government's partner in selling the latter's sovereign bonds since 2002. During its partnership period, JP Morgan has issued unfavorable assessments on the Indonesian market for several times.
The Indonesian financial ministry previously sent warning letters to the bank in 2008 and 2015 regarding the bank's bad assessments against Indonesian foreign bonds, Director for the strategy and portfolio financing at the ministry's financing and risk management office Scenaider Siahaan said in a text message on Wednesday.
JP Morgan was also in conflict of interests as it massively bought Indonesian bonds when the bonds' values dived down, which was the result of the bank's bad assessments, he said.
He, however, did not elaborate further on the losses suffered by the Indonesian government due to the bank's illicit act.
The official said that the ministry is ready to partner with the bank again if JP Morgan "could change" its attitude.
JP Morgan is among the foreign banks that handle Indonesian bonds sales. It has handled the sales of 14 billion U.S. Dollars of Indonesian sovereign bonds since 2012, including 3.4 billion U.S. Dollars last year.
JPMorgan head of communications for Southeast Asia Li Anne Wong said on Tuesday that the bank's operation in Indonesia would continue as usual despite the termination.
She said that impact on the clients was minimal and the bank was looking forward to working with the Indonesian finance ministry to resolve the matter.
