Investment Credit Surges Amid US-Iran Conflict, Here Are the Driving Factors
Amid the high tensions of the Middle East conflict, domestic businesses are still increasing their investments. This is evident from Bank Indonesia’s (BI) report, which records investment credit growth of 20.85% (year-on-year).
This situation is driven by various aspects. Senior Economist at the Institute for Development of Economics and Finance (Indef), Tauhid Ahmad, stated that the increase occurs because businesses still see long-term benefits from investments rather than for working capital.
“Actually, what is best for the economy is working capital. Because working capital is for raw materials, labour costs, auxiliary materials. Meanwhile, investments are mostly for buildings and fixed assets. So, in the current situation, rather than letting money sit idle in uncertain conditions, they choose to invest,” he said when contacted by detikcom on Saturday (2/5/2026).
Nevertheless, there are still several homework assignments for the government to boost this investment credit. First, the sector that needs to be encouraged from the investment credit side is manufacturing.
“If we look now, much of the investment is not in manufacturing but more in the services sector, construction, land, retail shops, and so on. In my opinion, it should be towards building industries, factories, that is the most important,” he explained.
Second, the location of investments. According to him, currently investment credit is largely used outside the industrial zones prepared by the government.
“I think the government must ensure that industrial zones are cheaper and more attractive compared to outside zones. Incentives can also be given more strongly,” he clarified.
Investment Credit Rises Due to Downstreaming
Contacted separately, Economist at the Center of Reform on Economics (CORE), Yusuf Rendy Manilet, mentioned that the driving factor for the growth of investment credit is downstreaming projects, especially in resource-based sectors like nickel and copper, which he described as investment-intensive.
“In addition, there are opportunities for industrial relocation from other countries entering Indonesia. On the banking side, liquidity is still loose, so there is wide room to disburse credit,” he explained.
According to him, the picture is different when compared to other segments. Working capital credit grew much lower, as did consumption credit.
“This gives a signal that the expansion occurring has not yet been followed by strong production activities and demand. Companies may have already built capacity, but are not fully confident to run production aggressively. There is a tendency to wait and see,” he stated.
Currently, credit growth for MSME and consumption segments has not strongly recovered because they are considered more risky. However, Yusuf assesses that this sector absorbs the most labour.
“So the challenge is not just to encourage credit growth, but to ensure that the credit really flows to real economic activities and creates jobs,” he concluded.
For information, BI notes that bank credit continues to be strengthened to support economic growth. Bank credit in March 2026 grew by 9.49% (year-on-year), higher than the growth in February 2026 of 9.37% (year-on-year).
Based on usage groups, this development is supported by investment credit, working capital credit, and consumption credit, which in March 2026 grew by 20.85% (year-on-year), 4.38% (year-on-year), and 5.88% (year-on-year) respectively. BI estimates that credit growth in 2026 will remain stable in the range of 8-12%, influenced by demand and supply sides.