HKI emphasises fiscal discipline to maintain investor confidence following Fitch downgrade
The Indonesian Industrial Estate Association (HKI) has emphasised the importance of fiscal discipline and consistent economic policy to maintain investor confidence following Fitch Ratings’ revision of Indonesia’s credit rating outlook.
HKI Chairman Akhmad Ma’ruf Maulana stated in Jakarta on Monday that the outlook change represents a serious signal requiring swift government response, given that country risk perceptions significantly influence investment decisions in the industrial sector.
“If not promptly addressed with clear corrective measures, the impact could be directly felt in industrial investment, project financing costs, and investor confidence,” he said.
Although Indonesia’s credit rating remains at investment grade level (BBB), HKI views the outlook change as reflecting growing market concerns about economic policy consistency and fiscal management credibility over the medium term.
HKI stressed that Indonesia’s industrialisation process is currently at a critical phase. Key manufacturing sectors including electronics, renewable energy, batteries, and resource-based downstream industries require substantial long-term investment. In these circumstances, fiscal policy stability, regulatory certainty, and economic governance credibility are essential factors for attracting and retaining industrial investment.
HKI also noted that shifts in country risk perception can directly impact rising capital costs for industrial projects. Global investors typically delay or reassess expansion plans when macroeconomic policy uncertainty emerges. Long-term, such conditions could reduce Indonesia’s competitiveness in regional investment competition against countries such as Vietnam, Thailand, and Malaysia, which are seen as strengthening policy certainty and investment governance.
Meanwhile, HKI observed that the Fitch outlook change occurs amid rising global economic uncertainty from geopolitical tensions, including conflicts involving Iran, Israel, and the United States in the Middle East. Escalation of such conflicts raises concerns over global logistics route stability, particularly the Strait of Hormuz, one of the world’s most vital energy trade routes.
Disruptions to global energy logistics routes could raise international energy and logistics costs, potentially triggering world trade disruption and creating new imbalances in global trade flows.
In this context, HKI believes the government should focus on accelerating realisation of already-committed investments. “In a world facing geopolitical conflict and global logistics disruptions, international investment flows tend to slow. Therefore, Indonesia’s most realistic strategy is ensuring acceleration of already-committed investments,” it stated.
The government needs to implement breakthroughs in investment acceleration, including streamlined licensing procedures, enhanced regulatory certainty, and strengthened inter-ministerial and local government coordination to prevent project implementation bottlenecks.
HKI emphasised that Indonesia actually possesses considerable advantages for attracting industrial investment, ranging from a large domestic market and abundant natural resources to a strategic position in global supply chains.