Indonesia: Total Investment rose to new highs in Q2 – UOB

Economist at UOB Group Enrico Tanuwidjaja and Junior Economist Agus Santoso comment on the latest Total Investment figures in Indonesia.

Key Takeaways

Indonesia continued to attract higher total investment in second quarter of 2023 at IDR349.8tn, registering a robust 15.7% y/y growth and marking a new record high in the last decade. Key drivers include investment in the metal processing industries which is in line with government’s program to enhance the down-streaming capacities onshore and optimism in Indonesian industry that remains in expansion zone. 

Foreign Direct Investment (FDI) contributed IDR163.5tn or 53.3% of total investment, while Domestic Direct Investment (DDI) contributed IDR163.5tn or 46.7%. Spatially, total investment outside of Java stood 52% share of total investment, while investment in Java recorded 48% of share. Higher investment outside of Java aligned with Indonesian government focus to accelerate infrastructure and industry development equality in eastern Indonesia. 

In terms of job creation, investment into Indonesia in 2Q23 contributed 464.3k new jobs, rising sharply by 44.9% y/y or +79.6k addition viz. the previous quarter. Going forward, Indonesian government is determined to expand minerals downstream which targeted 21 commodities as its target priority by 2023-2035. This agenda may encourage investment to grow larger continuing its trajectory.