DBS Research: Downstreaming and EVs Remain Attractive to Foreign Investors
In the midst of global uncertainties, DBS Research assesses that value-added sectors remain the primary draw for investment in Indonesia, particularly the electric vehicle (EV) ecosystem, nickel downstreaming, renewable energy, and infrastructure development. Head of Research Indonesia at DBS Group Research, William Simadiputra, emphasised that policy direction consistency will be a key factor in maintaining foreign investor interest.
“The EV ecosystem, nickel processing, renewable energy, and infrastructure sectors continue to form the pillars of growth strength. Consistency in downstreaming policies will be the main magnet for foreign investors amid the prevailing uncertainties,” said William in the latest DBS Research report released on Wednesday (13/2/2026).
DBS Research also noted that investment credit continues to grow positively, particularly in the construction, mining, and agriculture sectors. This indicates that domestic investment interest remains relatively stable despite global financial market volatility.
DBS Research views geopolitical tensions in the Middle East as one of the most influential factors on global and Indonesian economic prospects. Risks of global energy distribution disruptions are seen as potentially triggering oil price surges and increasing domestic inflation pressures.
In the base scenario, oil prices are projected to range between 80 and 85 US dollars per barrel. However, in an extreme scenario, global distribution disruptions could push oil prices up to 100 to 150 US dollars per barrel.
In addition to energy prices, rupiah exchange rate depreciation, rising producer price index (PPI), and weather risks due to El Niño are also factors that could heighten price pressures in the coming quarters.
DBS Research also assesses that Bank Indonesia will increasingly focus on maintaining exchange rate stability and market liquidity amid rising external pressures. Although the benchmark interest rate is still being held, monetary policy direction is seen as tending towards being more hawkish.
DBS Research views the strengthening of institutions and financial market reforms as important foundations for Indonesia’s long-term economic growth. Capital market reforms, enhanced legal certainty, and improved governance are seen as primary concerns for global investors.
In facing global volatility, DBS Research recommends that Indonesia deepen its domestic capital markets and reduce reliance on foreign fund flows by strengthening the role of local investors, including domestic pension funds, local investment managers, and Danantara as long-term financing sources.
On the sustainability front, the development of renewable energy and waste-to-energy (WTE) projects is seen as capable of enhancing Indonesia’s environmental, social, and governance (ESG) credibility in the eyes of global investors.
Based on DBS Research analysis, maintaining inflation and rupiah exchange rate stability is the primary foundation for preserving market confidence amid global uncertainties. To achieve this, the government and Bank Indonesia are urged to strengthen coordination of fiscal and monetary policies more solidly.
On the other hand, businesses must remain vigilant and begin anticipating potential rises in production costs triggered by global energy price fluctuations.
In efforts to maintain investment attractiveness and drive new growth sources, Indonesia needs to sustain downstreaming policy consistency and accelerate the development of the EV ecosystem and renewable energy. Additionally, the continuity of strategic infrastructure projects remains a crucial indicator for long-term investor confidence.
Finally, strengthening economic fundamentals must be supported by faster capital market reforms and institutional strengthening, accompanied by increased roles for domestic investors for long-term financing stability. By integrating ESG agendas and energy transitions as catalysts, Indonesia has great potential to create a more sustainable investment climate in the future.