Economist Urges Strengthening Business Climate to Boost Investment Flows

Jakarta (ANTARA) - Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti is urging the strengthening of the business climate to boost foreign investment flows into Indonesia. Speaking on Friday, she said that to attract sustainable foreign investment, a number of improvements are needed to enhance Indonesia’s attractiveness as an investment destination. According to her, the first factor that must be ensured is legal certainty for business actors. Additionally, investors will consider Indonesia’s market prospects and future economic growth before committing capital. Esther added that adequate availability of raw materials, a supportive business ecosystem, and integration with the global supply chain are other important factors in attracting foreign investors. Furthermore, reliable basic infrastructure such as energy, electricity, and water is a primary requirement to increase Indonesia’s competitiveness compared to other investment destination countries. Regulatory harmonisation between central and regional agencies is also necessary so that investors obtain certainty in running their businesses. Indef assesses that strengthening the investment climate is increasingly important as several fundamental economic indicators remain under pressure, even though Indonesia’s economic growth is recorded as quite high. An Indef study notes that the 5.61 percent economic growth is still supported by household consumption and government spending, while investment, manufacturing, and foreign trade are not yet strong enough to support long-term growth. The study also shows that pressure on the rupiah, foreign exchange reserves, and increasing fiscal risks are signals that the national economy still faces challenges that need to be anticipated. Therefore, Indef recommends that the government not only focus on pursuing economic growth but also strengthen the quality of growth, productivity, and national economic resilience. According to the institute, strengthening productive investment, the manufacturing sector, and value-added exports is necessary to reduce dependence on domestic consumption and government spending.