Indonesia Faces Significant Challenges in Attracting Foreign Direct Investment
Indonesia is facing significant challenges in attracting foreign direct investment (FDI), despite possessing considerable potential in several priority sectors such as mineral downstreaming and housing. Investor perceptions of government policy efficiency and infrastructure limitations remain the primary obstacles.
Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, stated that although Indonesia holds substantial potential, structural barriers continue to overshadow efforts to increase FDI flows.
"Investor perceptions of government policy efficiency and inadequate infrastructure remain the main obstacles," said Faisal at the CORE Midyear event, as quoted by Kontan.co.id on Thursday (24/7/2025).
According to him, to enhance investment attractiveness, the government needs to undertake policy reforms and accelerate infrastructure development.
Faisal emphasised that the mineral downstreaming and housing sectors still hold significant opportunities to attract investors. "These sectors could drive economic growth if managed properly," he said.
However, without comprehensive improvements to policy and infrastructure, this potential may not be fully realised.
Faisal also highlighted that policy uncertainty is a factor diminishing investor interest in investing in Indonesia. "This uncertainty makes investors hesitant to invest in Indonesia," he stressed.
Therefore, policy stability and transparency in the investment process are considered crucial to attracting greater FDI flows.
Furthermore, Faisal noted that Indonesia must be able to compete with other countries in the Southeast Asian region that are also vying to attract foreign investment.
"Neighbouring countries are also striving to attract investment by offering appealing incentives," Faisal revealed.
Consequently, Indonesia needs to create a more conducive investment climate so as not to fall behind in regional competition.
Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, stated that although Indonesia holds substantial potential, structural barriers continue to overshadow efforts to increase FDI flows.
"Investor perceptions of government policy efficiency and inadequate infrastructure remain the main obstacles," said Faisal at the CORE Midyear event, as quoted by Kontan.co.id on Thursday (24/7/2025).
According to him, to enhance investment attractiveness, the government needs to undertake policy reforms and accelerate infrastructure development.
Faisal emphasised that the mineral downstreaming and housing sectors still hold significant opportunities to attract investors. "These sectors could drive economic growth if managed properly," he said.
However, without comprehensive improvements to policy and infrastructure, this potential may not be fully realised.
Faisal also highlighted that policy uncertainty is a factor diminishing investor interest in investing in Indonesia. "This uncertainty makes investors hesitant to invest in Indonesia," he stressed.
Therefore, policy stability and transparency in the investment process are considered crucial to attracting greater FDI flows.
Furthermore, Faisal noted that Indonesia must be able to compete with other countries in the Southeast Asian region that are also vying to attract foreign investment.
"Neighbouring countries are also striving to attract investment by offering appealing incentives," Faisal revealed.
Consequently, Indonesia needs to create a more conducive investment climate so as not to fall behind in regional competition.