Indonesia Still a Prime Investment Destination with US$5.9 Billion in Foreign Capital Inflows

Permata Institute for Economic Research (PIER) recorded that foreign capital flows into Indonesia remained positive at approximately US$5.9 billion from January to early August 2026. Permata Bank Chief Economist Josua Pardede stated that these inflows indicate Indonesia continues to be an investment destination amidst persistent global economic uncertainty.

Short-term instruments, particularly Bank Indonesia Rupiah Securities (SRBI), attracted the bulk of the inflows, amounting to US$9.4 billion, while government bonds (SBN) saw net inflows of around US$610 million. In contrast, the stock market experienced outflows of approximately US$4.12 billion. Josua noted that the current preference for short-term instruments reflects a more selective and cautious investment strategy, with SRBI offering a safe haven amid global tensions.

A recovery in capital flows was observed in June 2026, coinciding with easing geopolitical tensions and progress in peace negotiations between the United States and Iran. Josua emphasised that domestic policy certainty is crucial to reviving investor appetite for riskier assets, including equities, with the MSCI index rebalancing also being a key focus for market participants.

In the bond market, Indonesia’s investor base demonstrated resilience. While bank holdings of government bonds declined by approximately IDR 257 trillion, foreign investors added around IDR 18 trillion. Bank Indonesia itself increased its holdings by roughly IDR 98 trillion, and insurance and pension funds added about IDR 143 trillion. Overall, total ownership of government bonds rose by approximately IDR 414 trillion to IDR 6,983 trillion. Josua added that the yield on the 10-year government bond had risen 121 basis points to 7.28 percent, one of the largest increases among Asian peers, yet domestic financial instruments remained attractive for fund placement.