Economist: Downstreaming Value is Key to Achieving Investment Targets
The Executive Director of the Institute for Development of Economics and Finance (INDEF), Esther Sri Astuti, believes that downstreaming strategies, accompanied by licensing reforms and infrastructure development, are crucial factors in achieving future investment realisation targets.
Speaking in Jakarta on Monday, she noted that the national investment target of Rp2,041 trillion for 2026 remains realistic, although it requires extra effort from the government to strengthen the business climate and maintain investment growth momentum amidst global dynamics.
According to Esther, investment needs are critical to supporting the national economic growth target of 8 per cent. “In reality, to achieve an 8 per cent economic growth target, an investment of Rp13,000 trillion is required with an ICOR of 4,” she stated.
With this achievement in mind, Esther believes the government has set a higher target for 2026 to maintain economic growth optimism. “If the 2026 investment target is Rp2,041 trillion, then the government has set a slightly higher target because the government must work even harder,” she said.
Furthermore, she explained that strategies to increase investment must be implemented comprehensively, at both macro and micro policy levels. She noted that one strategic step to boost investment at both national and regional scales is the strengthening of downstreaming, as this policy aims to drive economic transformation by processing raw materials into high-value-added products before export.
Additionally, licensing reform and legal certainty are considered essential to increasing investor confidence. The government is encouraged to continue simplifying regulations through integrated licensing systems, including debottlenecking to resolve investment hurdles.
Esther added that providing fiscal and non-fiscal incentives, such as tax ease, import duty reductions, and the provision of industrial land, could serve as additional attractions for investors who create new jobs.
To optimise investment portfolios, she suggested managing risk and diversification by not placing all capital into a single investment instrument. “Spread investments across various sectors or asset classes to dampen market volatility,” she said. On the other hand, a strategy of periodic consistency, or dollar-cost averaging, can be implemented through regular investments with fixed amounts, unaffected by market fluctuations, to obtain an average asset price.
The government has set the national investment target for 2026 at Rp2,041.3 trillion in accordance with the 2026 Government Work Plan (RKP), as part of the effort to drive economic growth towards 8 per cent during the 2025-2029 National Medium-Term Development Plan (RPJMN) period. In the first quarter of 2026, investment realisation in Indonesia reached Rp498.8 trillion, growing by 7.2 per cent compared to the same period last year, while absorbing 706,569 workers.