Indonesia's Credibility Tested Again by Global Turmoil
There are two major indicators that investors always pay attention to before investing in Indonesia, namely policy issues and land permits.
16 Sep 2026 08:31 WIB · Ekonomi & Bisnis
KOMPAS/TOTOK WIJAYANTO
JAKARTA, KOMPAS – Indonesia’s vision for high growth is once again confronted by global uncertainties. On the other hand, legal certainty and the business climate remain unfinished homework. In fact, these aspects are crucial for attracting investment as one of the engines of growth.
This is one of the key points in the discussion forum titled “Reclaiming Global Trust: Indonesia’s Investment Agenda for a Volatile World” organized by UOB Bank Indonesia, in Jakarta, on Tuesday (15/9/2026).
ASEAN Economist UOB, Enrico Tanuwijaya, stated that the current level of global uncertainty remains high. In addition to the surge in oil prices and inflation risks, the direction of monetary policy also affects global economic growth, which is expected to be on a slow track.
The US central bank, the Federal Reserve (The Fed), will make a decision regarding the direction of its policy interest rates on Thursday (16/9/2026) local time. The market also anticipates that The Fed is likely to raise its benchmark interest rate by 25 basis points (bps) to a level of 3.5-3.75 percent.
On the other hand, Bank Indonesia (BI) has indeed preceded The Fed by raising the interest rate by 100 basis points in May-June 2026 to a level of 5.75 percent. This means that even if The Fed tightens its policy, the difference between the interest rates of the United States and Indonesia remains around 200-225 basis points.
“If (the Fed’s interest rate) rises, it’s almost certain. But the tone is how much higher it will be in the future. As uncertainty increases, investor confidence declines,” Enrico said.
Therefore, according to him, this trust should be built by providing legal certainty and making efforts. In this regard, the government can begin to build trust from the fiscal side, particularly regarding the sustainability of regional development through the allocation of Transfer to Regions (TKD).
This is in light of the government’s continuous budget cuts to the TKD since 2025. Initially, the TKD funds were reduced from the original allocation of Rp 919 trillion to Rp 869 trillion. Furthermore, in 2026, the TKD allocation was cut again, leaving only Rp 693 trillion.
Every quarter, US$9 billion is returned to the country of origin in the form of dividend payments. If we are successful, they will stay here; automatically, they will reinvest.
This certainty is expected to strengthen investor confidence and encourage continued investment into Indonesia. Unfortunately, current practice shows that investment growth tends not to be accompanied by reinvestment.
“Every quarter, US$9 billion is returned to our home countries in the form of dividend payments. If we are successful, they will stay here; automatically, they will reinvest,” said Enrico.
This is reflected in the deficit of Indonesia’s primary income balance. Citing data from the Indonesian Balance of Payments (NPI) in the second quarter of 2026, the primary income balance recorded a deficit of 9.7 billion US dollars, an increase compared to the previous quarter which reached 9.1 billion US dollars.
He reminded that the deficit in the primary income balance is one of the contributors to Indonesia’s current account deficit. Therefore, with legal certainty and a conducive business climate, Indonesia’s economy will not only grow but also strengthen domestic resilience.
Meanwhile, the Director of Promotion for Southeast Asia, Australia, New Zealand, and the Pacific at the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM), Saribua Siahaan, stated that investment is the key for Indonesia to achieve 8 percent growth.
“There are two major indicators that always attract the attention of investors before they invest in Indonesia. The first is policy issues, and the second is land issues. If these two matters are clear, it means that investors will see that the domestic market still has prospects for the future,” he stated.
In this case, investors most frequently question the certainty of regulations regarding licensing and land use issues. Additionally, another factor often complained about by investors is the implementation of the Domestic Component Level (TKDN) policy.
Previously, the majority of business actors from the US expressed their complaints regarding import regulations in Indonesia, particularly concerning the import of raw material components. This was stated by the Chief Country Representative of Indonesia at the US-ASEAN Business Council (USABC), Nugraheni Utami, during a discussion forum at HHP Law Firm in Jakarta, Wednesday (9/9/2026) evening.
At the same opportunity, the Strategic Communications and Brand Head of UOB, Luke Ariefiandi, stated that the business world requires legal certainty and policies that support the business climate.
This legal certainty and fiscal discipline will also reduce foreign investors’ concerns about domestic market volatility.
Moreover, Indonesia is currently facing challenges, both from global and domestic perspectives. These challenges range from fluctuations in exchange rates, high global interest rates, to uncertainties in the prices of imported goods and inflation.
“This will certainly impact the confidence of global investors, who are becoming increasingly selective in determining investment objectives,” he said.
To strengthen market confidence, the simplification of investment permits needs to be supported by transparency in budget allocation, as well as political stability. Legal certainty and fiscal discipline will also mitigate foreign investors’ concerns regarding domestic market volatility.
Meanwhile, BI reported that Indonesia’s International Investment Position (IIP) in the second quarter of 2026 recorded a net liability of 197.4 billion US dollars. This figure is a decrease compared to the net