Domestic Business Expansion Stalls, PMDN Realisation Falls 7.8% in Q2 2026
JAKARTA. Investment expansion by domestic businesses is showing signs of slowing. This is reflected in the contraction of Domestic Direct Investment (PMDN) realisation in the second quarter of 2026, even as overall investment flows remain strong.
Data from the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) shows that PMDN realisation in Q2 2026 reached Rp 254.1 trillion, equivalent to 49.6% of the total national investment realisation of Rp 511.8 trillion.
This value fell 7.8% year-on-year compared to PMDN realisation in Q2 2025, which stood at Rp 275.5 trillion.
The contraction also suppressed PMDN’s contribution to total national investment. While its share in the first half of 2025 was 54.1%, it shrank to 49.8% in the first half of 2026.
The share of PMDN contribution to total investment realisation in Q2 2026 also experienced a sharp decline. Whereas in Q2 2025 the PMDN contribution reached 57.7% of national investment, in the same period this year the share fell to just 49.6%.
This decline indicates that the role of domestic investment in shaping national investment is weakening compared to the previous year.
Lead Economist at Bank Danamon, Irman Faiz, stated that this contraction is the first since 2021. “In our view, domestic businesses remain cautious about expanding due to weak domestic demand, high funding costs, and economic uncertainty,” Faiz told Kontan on Thursday (17/7/2026).
Meanwhile, Minister of Investment and Downstreaming/Head of BKPM Rosan Perkasa Roeslani acknowledged that investors, both domestic and foreign, are still assessing various risks in investing. However, he noted that investors remain willing to commit capital as long as the risks are measurable (calculated risk).
In an effort to maintain investment attractiveness, the government continues to pursue regulatory reform to provide business certainty. One such measure is the issuance of Government Regulation (PP) Number 28 of 2025, which simplifies and provides certainty in the investment licensing process.
According to Rosan, the policy has been well received by business associations, prospective investors, and existing investors in Indonesia because it provides clarity on licensing timelines. “When they apply for a permit, they now know, for example, that the permit will be completed in 10 days or 15 days. That provides certainty for investors,” he said.
He explained that the Ministry of Investment currently acts as the entry point for licensing, which is then forwarded to the relevant technical ministries. Through the implementation of a Service Level Agreement (SLA), each ministry has an agreed-upon deadline for completing permits.
Furthermore, since the enactment of PP Number 28, if a technical ministry fails to issue a decision within the SLA timeframe, the Ministry of Investment can directly issue the permit. This provision has been applied to licensing processes involving 18 ministries and agencies.
Rosan added that the government is also integrating the Online Single Submission (OSS) system electronically with all relevant ministries and agencies. This integration is accompanied by the development of new technology, including the use of blockchain and artificial intelligence (AI), to accelerate investment service processes.
He stressed that these reforms are a directive from the President to cut regulations deemed to hinder investment and to reduce sectoral ego among ministries and agencies.
According to Rosan, these steps are necessary for Indonesia to maintain its investment competitiveness amidst competition with neighbouring countries, which are also continuously reforming their policies and regulations to attract investors.