Indonesia\u2019s vision for high growth is once again being obstructed by\nglobal uncertainty. Simultaneously, legal certainty and the business\nclimate remain unfinished tasks, despite these aspects being decisive\nfactors for the influx of investment as a primary engine of growth.<\/p>\n
This was a central theme in a discussion forum titled \u2018Reclaiming\nGlobal Trust: Indonesia\u2019s Investment Agenda for a Volatile World\u2019,\norganised by Bank UOB Indonesia in Jakarta on Tuesday (15\/09\/2026).<\/p>\n
UOB ASEAN Economist, Enrico Tanuwijaya, stated that current global\nuncertainty remains high. In addition to surging oil prices and\ninflation risks, the direction of monetary policy is also influencing\nglobal economic growth, which is expected to enter a slow\ntrajectory.<\/p>\n
The US Federal Reserve is set to make a decision regarding its policy\ninterest rate direction on Thursday (17\/09\/2026) local time. Markets\nanticipate that the Fed will likely raise its benchmark interest rate by\n25 basis points (bps) to a level of 3.5-3.75 per cent.<\/p>\n
On the other hand, Bank Indonesia (BI) had already preceded the Fed\nby raising its interest rate by 100 bps in May-June 2026 to a level of\n5.75 per cent. This means that even if the Fed tightens its policy, the\ninterest rate differential between the US and Indonesia remains at\n200-225 bps.<\/p>\n
\u201cIf the Fed rate rises, it is almost certain. However, the concern is\nhow much more will follow in the future. Because uncertainty is\nincreasing, investor trust is declining,\u201d said Enrico.<\/p>\n
Therefore, he suggested that such trust should be built by providing\nlegal and business certainty. In this regard, the government could begin\nbuilding confidence through fiscal measures, specifically regarding the\nsustainability of regional development through the allocation of\nregional transfer funds (TKD).<\/p>\n
This comes as the government has continued to cut TKD budgets since\n2025. Initially, TKD funds were reduced from an initial allocation of Rp\n919 trillion to Rp 869 trillion. Furthermore, in 2026, the TKD\nallocation was cut again, leaving only Rp 693 trillion.<\/p>\n
Every quarter, approximately US$9 billion is returned to the home\ncountries in the form of dividend payments. If we are successful, they\nwill stay here, and automatically, they will reinvest.<\/p>\n
From such certainty, investor confidence is expected to strengthen,\nensuring investment continues to flow into Indonesia. Unfortunately,\ncurrent practices show that investment growth tends not to be\naccompanied by reinvestment.<\/p>\n
This is reflected in Indonesia\u2019s primary income account deficit.\nCiting data from the Indonesian Balance of Payments (BOP) for the second\nquarter of 2026, the primary income account recorded a deficit of US$9.7\nbillion, an increase from the previous quarter\u2019s deficit of US$9.1\nbillion.<\/p>\n
He warned that the primary income account deficit is one of the\ncontributors to Indonesia\u2019s current account deficit. Therefore, with\nlegal and business climate certainty, the Indonesian economy will not\nonly grow, but domestic resilience will also become more robust.<\/p>\n
Meanwhile, the Director of Regional Promotion for Southeast Asia,\nAustralia, New Zealand, and the Pacific at the Ministry of Investment\nand Downstreaming\/Investment Coordinating Board (BKPM), Saribua Siahaan,\nstated that investment is the key for Indonesia to achieve 8 per cent\ngrowth.<\/p>\n
\u201cThere are two major indicators that investors always consider before\ninvesting in Indonesia. The first is the issue of policy, and the second\nis the issue of land. If these two things are clear, it means investors\nwill see that the domestic market still holds future prospects,\u201d he\nsaid.<\/p>\n
In this regard, investors most frequently question regulatory\ncertainty regarding permits and land use. Additionally, another factor\nfrequently complained about by investors is the implementation of\nDomestic Component Level (TKDN) policies.<\/p>\n
Previously, most US-based businesses complained about import\nregulations in Indonesia, particularly regarding the import of raw\nmaterial components. This was revealed by the Chief Country\nRepresentative for Indonesia at the US-ASEAN Business Council (USABC),\nNugraheni Utami, in a discussion forum held by HHP Law Firm in Jakarta\non Wednesday (09\/09\/2026) evening.<\/p>\n
On the same occasion, UOB Strategic Communications and Brand Head,\nLuke Ariefiandi, stated that the business world requires legal certainty\nand policies that support the business climate.<\/p>\n
Legal certainty and fiscal discipline would mitigate foreign\ninvestors\u2019 concerns regarding domestic market volatility.<\/p>\n
This is especially pertinent as Indonesia faces challenges both\nglobally and domestically, ranging from exchange rate fluctuations and\nhigh global interest rates to uncertainty in import prices and\ninflation.<\/p>\n
\u201cThis certainly impacts the confidence of global investors, who are\nbecoming increasingly selective in determining investment destinations,\u201d\nhe said.<\/p>\n
To strengthen market confidence, the simplification of investment\npermits needs to be supported by transparency in expenditure allocation\nand political stability. Legal certainty and fiscal discipline will\ndampen foreign investors\u2019 fears regarding domestic market\nvolatility.<\/p>\n
Meanwhile, Bank Indonesia reported that Indonesia\u2019s International\nInvestment Position (IIP) for the second quarter of 2026 recorded a net\nliability of US$197.4 billion. This figure decreased compared to the net\nliability at the end of the first quarter of 2026.<\/p>\n
This decrease occurred because the position of Foreign Financial\nLiabilities (KFLN) fell by 1.9 per cent, from US$783.7 billion in the\nfirst quarter of 2026 to US$769 billion in the second quarter of\n2026.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesias-credibility-tested-by-global-volatility-1789527137", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }