TEMPO.CO, Jakarta - The Finance Ministry's decision to suspend its partnership with JPMorgan Chase Bank may be the right move, given JPMorgan's negative analysis on investing in Indonesia, which saw Indonesia downgraded two points from overweight (buy) to underweight (sell).

As a financial services management company, JPMorgan routinely carries out market assessments to offer appropriate recommendations to its clients. In its last analysis on November, JPMorgan recommended that clients dump Indonesian stocks and bonds citing heightened investment risks in emerging markets in the wake of Donald Trump's US presidential win. The finance ministry questioned JPMorgan's rationale, given that the bank downgraded Indonesia two notches while lowered just one grade downfrom overweight to neutralfor Brazil, a country with a less stable economy after President Dilma Rousseff's impeachment.

Finance Minister Sri Mulyani's instruction to discontinue all agreement with the bank was issued on November 17 but only announced last week. In his official letter to JPMorgan Chase Bank, Treasury DirectorGeneral Marwanto Harjowiryono explained that the ministry's action was prompted by the bank's negative analysis which could destabilize Indonesia's economy.

It should be noted that JPMorgan is not a rating agency, but a government bond dealer and investment manager. As such, the bank naturally needs to sell its products but at the same time is required to safeguard its customers' interests.

Admittedly, the bank needs to carry out critical assessments and the results are usually intended for internal recommendations, not for rating purposes. Even so, it is not uncommon for foreign investors to refer to these recommendations.

Jakarta Stock Exchange Director Tito Sulistio alleged that JPMorgan had deliberately issued a negative analysis to push investors to sell off Indonesia stocks at lower prices so that the bank could resell at higher prices later. Accusing the bank of malicious intent would require more concrete evidence. It should be remembered that as an agent, JPMorgan cannot possibly declare Indonesia bonds as great if indeed the reality says otherwise.

But JPMorgan's negative track record of multiple lawsuits and fines over the years should not be ignored. Last year, for example, the US Commodity Futures Trading Commission, fined JPMorgan US$300 million for manipulating investors to invest in companies affiliated with the bank. A year before that, it was also ordered to pay a hefty US$2 billion in fines over the Bernard Madoff investment scam after he was convicted of violating the US bank secrecy act.

Trust and good will are important aspects in any business. The government's suspicion that JPMorgan"s analysis was driven by negative sentiment shows that it has lost trust in the bank and the termination of business contract seems reasonable and understandable. However, this decision should be accompanied by an official statement so that the fallout would not cause further damage to Indonesia's economy. (*)

Read the full story in this week's edition of Tempo English Magazine