The ASEAN region continues to shine as a beacon for global investors, with Foreign Direct Investment (FDI) surging by five percent to an impressive USD 224 billion, even amidst the turbulent global economic landscape. Notably, Singapore saw the highest spike in FDI, with Indonesia following closely behind in the investment race.
Data sourced from the Ministry of Investment/Investment Coordinating Board (BKPM) for the year 2022 paints a promising picture. It reveals that the share of global FDI flowing into this dynamic region has been consistently on the rise, growing from just under 15 percent to a robust over 17 percent of the total global FDI. In a noteworthy achievement, FDI inflows into ASEAN in 2022 surpassed those into China for two consecutive years.
A closer look reveals that six out of the 10 ASEAN member states experienced an upswing in FDI inflows. Singapore, in particular, boasted the most significant increase, accounting for over 60 percent of the total FDI in ASEAN. Meanwhile, Malaysia, Singapore, and Vietnam also achieved record-breaking FDI figures. Indonesia secured its position as the second-highest FDI destination in ASEAN, attracting a substantial USD 22 billion.
The United States retained its status as the largest global shareholder, contributing a substantial USD 37 billion, marking a six percent increase from the previous year. This surge was driven primarily in the manufacturing and finance sectors, which combined to reach an impressive USD 20 billion. Intra-ASEAN FDI was a close contender, totaling USD 28 billion.
Indonesia Remains a Premier Investment Hub
Indonesia continues to be a preferred choice for foreign investors, as demonstrated by research conducted by the Economic and Social Research Institute (LPEM) at the Faculty of Economics and Business, University of Indonesia (FEB UI). The top five countries making substantial asset in Indonesia include Singapore (USD 3.4 billion), China (USD 2.6 billion), Hong Kong (USD 2.0 billion), Japan (USD 1.0 billion), and the United States (USD 0.8 billion).
Based on data from the Investment Coordinating Board (BKPM), as reported by Ekonomi Republika, investment realization amounted to a remarkable IDR 349.8 trillion in the second quarter of 2023. Of this total, 46.7 percent came from domestic assets, totaling IDR 163.5 trillion. The remaining 53.3 percent, equivalent to IDR 186.3 trillion, was sourced from foreign direct investments.
Encouragingly, the positive performance in the second quarter of 2023 underscores optimism about the prospects. Notably, sectors such as transportation, warehousing, and telecommunications have garnered significant attention from investors.
When dissected by geographical regions, investments outside of Java reached IDR 182.0 trillion, constituting 52.0 percent of the total realization in the second quarter of 2023. Conversely, all of those within Java amounted to IDR 167.8 trillion, accounting for 48.0 percent of the total realization.
The top three destinations in the second quarter of 2023 were West Java (IDR 53.7 trillion), DKI Jakarta (IDR 43.0 trillion), and East Java (IDR 31.1 trillion).
Indonesia Drives Investment Growth in the ASEAN Region
Indonesia, in its role as the Chair of ASEAN in 2023, spearheads initiatives through the Ministry of Investment/BKPM to position itself as a global investment hub driving regional growth. These initiatives encompass strengthening cooperation and supply chain development, particularly in sectors that offer high value addition. They also involve empowering Small and Medium-sized Enterprises (SMEs), including promoting partnerships with larger enterprises, ensuring balanced investment protection while considering sensitivities, and the developmental stage of each country.
This was articulated by Deputy for Investment Cooperation of the Ministry of Investment/BKPM, Riyatno, during a discussion at the Forum Merdeka Barat (FMB) 9, themed “Investment Opportunities through the 43rd ASEAN Summit,” and a Press Conference on the Road to the ASEAN Summit 2023 in Jakarta on Tuesday, August 15, 2023.
Riyatno emphasized, “We at the Ministry of Investment wholeheartedly support initiatives aimed at fostering growth not only within one ASEAN country but also ensuring that all ASEAN members reap the benefits of regional cooperation,” as quoted from indonesia.go.id.
He elaborated that several interconnected factors are contributing to the increase in FDI inflows, including heightened of the sector in various project types that reflect favorable investor sentiment in the region.
Furthermore, the substantial achievement of FDI in the manufacturing sector signifies a robust recovery in the ASEAN region from the pandemic and a resurgence of industrial activities. Other contributing factors include corporate investment strategies focused on expanding capacity to build supply chain facilities, strengthening existing supply chain networks, and establishing a more robust regional presence.
The presented data and reports affirm that the ASEAN region, with Indonesia at the forefront, remains an enticing prospect for global investors. This presents an opportunity for the Indonesian government to maintain this momentum, while also bolstering the nation’s economic growth in 2023.
20% off today. Whatsapp us!