JAKARTA (Reuters) -Foreign direct investment (FDI) into Indonesia dropped 6.95% in the second quarter from a year earlier to 202.2 trillion rupiah ($12.3 billion), investment ministry data showed on Tuesday, marking the deepest contraction in five years.
Rising geopolitical tensions have eroded appetite for investment in the country, Investment Minister Rosan Roeslani said at a press conference when asked about the drop in FDI.
“It can’t be denied that geopolitics have significantly influenced investment around the world,” he said without elaborating.
In early April, U.S. President Donald Trump announced tariffs on trillions of dollars of U.S. imports, including from Indonesia, which was slapped with a levy of 32%, later reduced to 19% after the two sides reached an agreement this month.
The data excludes investment in the financial and oil and gas sectors.
The fall in FDI was the biggest since a 9.2% annual fall in the first quarter of 2020, according to data from LSEG.
Rosan added that the global backdrop has intensified the competition among countries to attract investment, but the government was still hopeful to close the year with higher investment growth.
“(Imports) of capital goods have increased, it means the construction of new plants will also increase,” Rosan said. “God willing, the investment target will be achieved.”
As of June, total investment in the country, including from domestic firms, reached 943 trillion rupiah, or nearly half of the 2025 target of 1,905.6 trillion rupiah.
Including domestic sources, Southeast Asia’s largest economy saw a total of 477.7 trillion rupiah worth of direct investment in the second quarter, creating 665,764 jobs, the ministry said.
Some of the biggest beneficiaries of FDI in the April-June period were the base metal, mining, services, transportation, warehouse and telecommunication industries, the ministry said.
Singapore, Hong Kong and China were the biggest sources of FDI in the second quarter.
($1 = 16,385 rupiah)
(Reporting by Stefanno Sulaiman; Editing by John Mair and David Stanway)
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