Indonesia’s Q4 FDI Records Slowest Growth in Three Years

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Foreign direct investment (FDI) inflows into Indonesia, excluding investments in banking and the oil & gas sectors, experienced a notable deceleration to 5.3 percent in the fourth quarter of 2023, amounting to IDR 184.4 trillion. This decline contrasts sharply with the 16.2 percent surge recorded in the preceding quarter, marking the slowest growth since the third quarter of 2020. The subdued FDI growth reflects investors’ cautious stance as they adopt a wait-and-see approach in anticipation of the general elections scheduled for February 2024.

Among the sectors, the base metal industry emerged as the largest recipient of FDI, followed by mining, warehousing, telecommunications, pharmaceuticals, and pulp and paper. Notably, Singapore, China, and Hong Kong remained the primary sources of overseas investment in Indonesia. Despite the overall slowdown, FDI inflows into Southeast Asia’s largest economy have remained robust post-pandemic, especially in the mineral processing industry.

Looking at the full year, total FDI for 2023 amounted to IDR 744 trillion, reflecting a respectable increase of 13.7 percent compared to the previous year. This upward trend underscores Indonesia’s enduring attractiveness as an investment destination, despite the uncertainties surrounding the upcoming elections and global economic conditions.