Foreign Direct Investment Faces Headwind Amid Global Downtrend

Foreign direct investment (FDI) is on a downward trend worldwide, setting up a headwind for Indonesia's competitiveness amid the overwhelming need for foreign investment.

Maria Elena

23 Jan 2024 - 20.44
Foreign Direct Investment Faces Headwind Amid Global Downtrend

Illustration - Foreign direct investment.

Bisnis, JAKARTA — The global economic slowdown is suppressing foreign direct investment (FDI) in many countries, including Indonesia. UNCTAD data released last weekend noted that the realization of foreign direct investment in Southeast Asia fell by 16% to $192 billion, the lowest in at least three years.

All ASEAN countries serving as foreign investment centers recorded declines, including Indonesia, Thailand, and Vietnam. This indicates the impact of economic uncertainty caused by geopolitical tensions, inflation suppressing demand, and high benchmark interest rates limiting foreign investor capital.

Although domestic investment has dominated investments in Indonesia in recent quarters, the government still hopes for more foreign direct investment inflows, as FDI is one of the indicators of the country's ease of business.

On the other hand, domestic investment needs continue to mount, especially after the government updated several projects nationwide. One example is the development plan for the Batam, Bintan, and Karimun regions, which require an average annual investment of IDR97 trillion during 2022–2026. The figure increases to IDR422 trillion per year by 2042–2046.

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Editor: Yusuf Waluyo Jati

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Foreign Direct Investment Faces Headwind Amid Global Downtrend

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