Investment plays a crucial role in driving Indonesia's economic growth towards realizing its vision of becoming a developed nation by 2045. The surge in both domestic and foreign investments serves as a fresh impetus for the development of various economic sectors. Indonesia witnessed a robust economic growth of 5.05% (yoy) in 2023 amidst global economic uncertainties, propelled by strong domestic demand, particularly in consumption and investment activities. Investment realization in 2023 surpassed President Joko Widodo's target, reaching Rp1,418.9 trillion, absorbing 1,823,543 workers. The Minister of Investment/Head of the Investment Coordinating Board (BKPM), Bahlil Lahadalia, noted a 17.5% year-on-year increase in investment achievement in 2023 compared to 2022. Foreign direct investment (FDI) accounted for Rp744.0 trillion, constituting 52.4% of total investment, while domestic investment stood at Rp674.9 trillion, comprising 47.6%. In 2024, Indonesia's economic growth is forecasted between 4.7% to 5.5%, supported by increased investment, especially in infrastructure projects like the National Strategic Projects (PSN), including the development of the new capital, Nusantara Capital (IKN). To achieve the targeted investment of Rp1,650 trillion in 2024, the Government plans to enact various measures, including implementing regulations such as the Omnibus Law and focusing on downstreaming natural resources and the development of Nusantara Capital.
Additionally, efforts to improve business climate through tax incentives like super deduction tax and tax holidays aim to attract more investment domestically. The government's commitment to infrastructure development across regions will enhance connectivity and logistics distribution, further facilitating business processes and making Indonesia an attractive investment destination. Furthermore, Indonesia's economic stability amidst global economic slowdowns and financial market uncertainties enhances its attractiveness to investors. The post-2024 election period is anticipated to sustain economic activities, bolstered by continued structural policies such as Nusantara Capital development and commodity downstreaming. Fitch Ratings forecasts Indonesia's economy to grow by 4.9% in 2024, driven by domestic consumption and solid investments, supported by ongoing structural policies and macroeconomic stability measures. With sustained efforts in investment optimization, Indonesia's economic activities and growth prospects are poised for expansion.
