But remarkably, domestic direct investment (DDI) realization surged 30.5 percent (y/y) to IDR 84.7 trillion (approx. USD $5.6 billion) in the third quarter of 2018. Therefore, we detect a major difference between foreign and domestic direct investment realization so far in 2018: while FDI has been declining markedly since the first quarter of 2018, DDI has in fact continued its growing trend (see table below).

Foreign and Domestic Direct Investment in Indonesia:

    Q1
2017
  Q2
2017
  Q3
2017
  Q4
2017
  Q1
2018
  Q2
2018
  Q3
2018
Foreign Direct Investment
(in IDR trillion)
 97.0 109.9 111.7 112.0 108.9  95.7  89.1
Domestic Direct Investment
(in IDR trillion)
 68.8  61.0  64.9  67.6  76.4  80.6  84.7
Total Direct Investment
(in IDR trillion)
165.8 170.9 176.6 179.6 185.3 176.3 173.8

Source: BKPM

What is remarkable is that the value of DDI and FDI were not far apart in Q3-2018. This is in stark contrast to the usual situation (where the value of FDI - by far - outpaces the value of DDI) and if this recent trend continues, then the value of DDI will outpace the value of FDI in the last quarter of 2018. While it is positive that Indonesia becomes less dependent on FDI in terms of direct investment realization, it is obviously not a positive development to see FDI contracting for three consecutive quarters.

[...]

Read the full article in the October 2018 edition of our monthly research report. You can purchase this report by sending an email to info@indonesia-investments.com or a WhatsApp (WA) message to the following number: +6287884106944


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