The Strategic Implications of the Singapore-Indonesia Depository Receipts Linkage for Cross-Border Equity Investment

The launch of the Singapore-Indonesia Depository Receipts (DR) Linkage on October 16, 2025, marks a pivotal moment in Southeast Asia's financial integration. By enabling Singapore investors to access Indonesian blue-chip equities such as Bank Central Asia and Telkom Indonesia through Singapore Depository Receipts (SDRs), the initiative bridges regulatory and operational gaps between two of the region's largest economies. This linkage, structured as unsponsored depository receipts issued by Phillip Securities, allows investors to trade Indonesian-listed securities on the Singapore Exchange (SGX) in Singapore dollars, bypassing the complexities of foreign market regulations and currency conversion, as reported by The Business Times.

The strategic design of the SDR Linkage underscores its role in enhancing capital mobility. For instance, the average daily traded value of SDRs surged to S$16 million in September 2025, a record high that reflects robust demand from both institutional and retail investors; The Business Times also reported this surge. This liquidity boost is not merely a local phenomenon but part of a broader trend. SGX's existing DR linkages with Hong Kong and Thailand have already demonstrated the potential of such mechanisms to diversify investment portfolios and deepen market participation. With Indonesia's addition, the total number of SDRs listed on SGX has expanded to 26, creating a more diversified regional equity corridor, a point the Business Times highlighted.

Beyond liquidity, the linkage aligns with ASEAN's ambition to transform its financial markets into a cohesive, globally competitive hub. A 2024 partnership between SGX and the Indonesia Stock Exchange (IDX) laid the groundwork for this collaboration, which now joins a growing network of six major ASEAN stock exchanges-SGX, IDX, SET, PSE, VNX, and Bursa Malaysia-pursuing joint DR initiatives, according to The Edge Malaysia. This collective effort mirrors the success of the SGX-SET linkage and aims to standardize cross-border investment frameworks, reducing friction for capital flows across national borders. Such integration is critical for Southeast Asia, where fragmented markets have historically limited the region's appeal to global investors.

The implications for capital mobility are profound. By simplifying access to Indonesian equities, the SDR Linkage democratizes investment opportunities, particularly for retail investors in Singapore who have shown strong interest in these products, as noted by The Business Times. This, in turn, could catalyze a virtuous cycle: increased demand for Indonesian blue-chips may drive up liquidity and market depth in Jakarta, while Singapore's role as a regional financial hub is reinforced through its facilitation of cross-border capital.

However, challenges remain. Regulatory harmonization across ASEAN is still a work in progress, and the long-term success of the linkage will depend on maintaining investor confidence and addressing potential risks such as currency volatility or geopolitical tensions. Nonetheless, the Singapore-Indonesia DR Linkage represents a bold step toward a more interconnected Southeast Asian financial ecosystem-one that could rival the scale and efficiency of established markets in Europe or North America.