The growth of foreign direct investment (FDI) in Indonesia slowed in the second quarter of 2025. This decline was triggered by intense global competition in attracting investments and the trend of several major countries, such as the United States, which have begun to repatriate their investment flows back to their home countries.
“The competition to attract investment is now increasingly intense. At the same time, many countries, such as the US, are beginning to repatriate their investments back to their home countries. This is what we must navigate properly and correctly,” said the Minister of Investment and Downstream Industry, Rosan Perkasa Roeslani, at a press conference in Jakarta, Tuesday (29/7/2025).
So, is Indonesia still worth investing?
This article will cover the comprehensive overview for Foreign Investment in Indonesia throughout 2024 and provide you with the outlook for your future investment in Indonesia.
What Determines Foreign Direct Investment in Indonesia?
Foreign Direct Investment (FDI) flows into Indonesia are shaped by a complex interplay of global trends and domestic conditions. For international investors, understanding these factors is essential to evaluating opportunities in 2025 and beyond.
1. Policy and Regulatory Environment
Indonesia has implemented reforms through the Omnibus Law on Job Creation and the Positive Investment List, which streamline business licensing and open previously restricted sectors to foreign participation. Clearer rules and a simplified investment approval process under the Online Single Submission (OSS) system reduce bureaucratic friction, making it easier for investors to enter the market. However, some strategic sectors, such as energy, natural resources, and defence, still require local partnerships or government approval.
2. Market Size and Demographics
With a population exceeding 280 million people, Indonesia is Southeast Asia’s largest consumer market. A growing middle class, rapid urbanisation, and rising digital adoption continue to attract consumer goods, e-commerce, and fintech investments. For many companies pursuing a “China+1” strategy, Indonesia represents a natural destination for diversification.
3. Infrastructure and Connectivity
The government has prioritised massive investments in transportation networks, ports, airports, and digital infrastructure. Better connectivity reduces logistics costs and creates opportunities in sectors such as manufacturing, logistics, and telecommunications, particularly as Indonesia pushes to become a regional hub.
4. Economic and Political Stability
Macroeconomic resilience such as steady GDP growth, controlled inflation, and prudent fiscal management, strengthens investor confidence. Meanwhile, political stability, especially following the 2024 elections, plays a central role in assuring long-term commitment from foreign investors.
5. Natural Resource Endowment
Indonesia is one of the world’s leading producers of nickel, coal, palm oil, and natural gas. Global demand for critical minerals, particularly nickel for EV batteries, has positioned Indonesia as a strategic investment hotspot for renewable energy and downstream industries.
6. Global Investment Climate
FDI inflows are also influenced by external dynamics. The government has acknowledged increasing competition with other countries for capital, particularly as advanced economies such as the United States encourage investment repatriation. This trend is expected to influence the pace of investment growth in 2025, making strategic positioning even more critical.
Overview for Foreign Investment in Indonesia 2024
Jakarta continues to stand as one of Indonesia’s most dynamic economic engines, anchoring the nation’s investment landscape. According to the 2024 Investment Realization Report published by the Ministry of Investment/Investment Coordinating Board (BKPM), the capital city not only maintained its role as a magnet for both domestic and foreign investors but also accelerated its contribution to the national economy throughout the year.
Between October and December 2024 (Q4), Jakarta recorded IDR 50.1 trillion in total investment realization. Of this amount, Foreign Direct Investment (FDI) accounted for USD 1.4 billion (around IDR 21.6 trillion), while Domestic Direct Investment (DDI) contributed IDR 28.5 trillion. Compared to the same quarter in 2023, this represents an impressive 37.3% year-on-year increase in overall investment.
On an annual scale, Jakarta secured IDR 241.9 trillion in total investments during 2024—equivalent to 14.1% of the national figure, making it the second-largest investment destination in Indonesia. Within that figure, the city led the country in domestic direct investment, reaching IDR 128.4 trillion (15.8% of national DDI), while ranking third in FDI inflows with USD 7.6 billion (12.6% of the national total). Overall, Jakarta’s investment performance surged by 45.1% compared to 2023, underscoring its strength as a resilient and attractive business hub.
Key Sectors Driving Investment in 2024
Transportation, Warehousing & Telecommunications: IDR 87.2 trillion (36% of Jakarta’s total investment) — reflecting the capital’s role as a logistics and connectivity centre.
Other Services: IDR 46.9 trillion (19%), highlighting growth in creative industries, digital services, and professional sectors.
Trade & Repair Services: IDR 33.1 trillion (14%), driven by rising consumer demand in Southeast Asia’s largest urban market.
Housing, Industrial Estates & Office Complexes: IDR 20.7 trillion (9%), signalling strong property development.
Construction: IDR 16.9 trillion (7%), aligned with the government’s infrastructure expansion agenda.
Investment Distribution Across Jakarta
- Investment flows within Jakarta were uneven but significant across regions:
- South Jakarta: IDR 116.49 trillion (48.17%) – the city’s primary magnet for investment.
- Central Jakarta: IDR 53.18 trillion (21.99%) – boosted by commercial and financial services.
- North Jakarta: IDR 31.76 trillion (13.13%) – supported by port and logistics activities.
- East Jakarta: IDR 20.56 trillion (8.50%) – driven by manufacturing and industrial facilities.
- West Jakarta: IDR 19.82 trillion (8.20%) – a hub for trade and retail.
- Thousand Islands: IDR 0.03 trillion (0.01%) – a modest figure, but with potential for tourism-driven growth.
Jakarta’s Strategic Role
These figures confirm that Jakarta is not only Indonesia’s political and administrative capital but also a strategic investment hub. Its growing infrastructure, expanding digital ecosystem, and vast consumer base reinforce its positioning as a future-ready global city. The city’s strong 2024 performance sets the stage for both domestic and foreign investors to further explore opportunities in transportation, technology, real estate, and industrial development, while also preparing to navigate the competitive global environment that will shape Indonesia’s investment outlook in 2025.
FDI in Indonesia by country 2024
Indonesia’s position as one of Southeast Asia’s most attractive investment destinations was reaffirmed in 2024, with Foreign Direct Investment (FDI) reaching USD 16.65 billion (IDR 60.01 trillion), according to the Central Statistics Agency (Badan Pusat Statistik, BPS – bps.go.id, March 2025). The data highlights how global capital continues to flow into Indonesia, with Asia and Europe standing out as the two largest contributors.
FDI Realization by Country (2024)
(Source: bps.go.id, March 2025 – amounts in million USD)
| Region / Country | Number of Projects | Investment (US$ million) |
| America (Total) | 9,303 | 5,526.3 |
| └─ USA | 4,831 | 3,696.8 |
| └─ Canada | 1,103 | 492.7 |
| └─ Other Americas | 3,369 | 1,337.0 |
| Europe (Total) | 39,178 | 4,594.9 |
| └─ Belgium | 1,241 | 166.5 |
| └─ Denmark | 528 | 43.6 |
| └─ France | 6,437 | 328.1 |
| └─ Italy | 1,789 | 70.5 |
| └─ Netherlands | 5,706 | 1,977.1 |
| └─ Norway | 180 | 81.3 |
| └─ Germany | 3,235 | 343.3 |
| └─ United Kingdom | 3,941 | 745.4 |
| └─ Switzerland | 1,731 | 244.9 |
| └─ Other Europe | 14,390 | 594.0 |
| Asia (Total) | 108,333 | 48,563.0 |
| └─ Japan | 12,823 | 3,463.9 |
| └─ China | 21,464 | 8,106.9 |
| └─ South Korea | 11,210 | 2,987.7 |
| └─ Hong Kong | 8,896 | 8,216.5 |
| └─ Taiwan | 1,619 | 344.8 |
| └─ Singapore | 32,285 | 20,075.2 |
| └─ India | 3,412 | 173.1 |
| └─ Other Asia | 16,624 | 5,194.9 |
| Australia (Total) | 7,959 | 1,050.3 |
| └─ Australia | 6,772 | 739.1 |
| └─ New Zealand | 696 | 26.0 |
| └─ Other Australians | 491 | 285.2 |
| Africa (Total) | 1,877 | 279.5 |
| └─ Nigeria | 27 | 0.1 |
| └─ Other Africa | 1,850 | 279.4 |
| Other Countries | – | – |
| Grand Total | 166,650 | 60,014.0 |
Key Insights from 2024
With USD 48.56 billion, Asian investors account for nearly 73% of Indonesia’s total FDI, dominated by Singapore (USD 20.07 billion), China (USD 8.10 billion), and Hong Kong (USD 8.21 billion), while European countries invested USD 4.59 billion, led by the Netherlands (USD 1.97 billion) and the UK (USD 745 million). Additionally, The US alone contributed USD 3.69 billion, making it one of the top individual investor countries.
Much of the capital inflow was channelled into basic metals, telecommunications, logistics, construction, and real estate, aligning with Indonesia’s industrialisation and infrastructure agenda.
Foreign Direct Investment Realisation by Province in 2025
Total investment realisation (FDI and Domestic) reached IDR 942.9 trillion, achieving 49.5% of the national target. FDI contributed IDR 432.6 trillion. West Java led with IDR 141 trillion, followed closely by Jakarta at IDR 140.8 trillion. Other top provinces included East Java (IDR 74.7 trillion), Central Sulawesi (IDR 64.2 trillion), and Banten (IDR 60.7 trillion). Investment outside Java slightly surpassed investment within Java. Central Sulawesi was the top province outside Java and ranked second in foreign investment. The basic metal sector and transportation, warehousing, and telecommunications were leading sectors for foreign investment. Singapore was the largest source of foreign investment.
Q2 2025
Investment realisation in Q2 reached IDR 477.7 trillion, an 11% increase YoY (year-on-year). West Java received the most investment at IDR 72.5 trillion, followed by Jakarta with IDR 71.1 trillion. Other significant provinces are listed in the source documents. FDI in Q2 2025 saw a decrease of 6.9% compared to Q2 2024, totaling IDR 202.2 trillion. Investment outside Java accounted for 50.3% of new investments. The basic metal industry received the most investment. Singapore remained the top FDI contributor.
Q1 2025
Total investment realisation in Q1 reached IDR 465.2 trillion, a 15.9% increase year-on-year, representing 24.4% of the 2025 target. FDI grew by 12.7% year-on-year, reaching IDR 230.4 trillion. Jakarta received the largest share of investment, followed by West Java and East Java. Central Sulawesi also ranked in the top five. Investment outside Java slightly exceeded investment within Java. The basic metal and metal goods industry received the largest investment. Singapore was the largest source of FDI, followed by Hong Kong and China.
Note: Some sources provide slightly different figures for provincial investment, which could be attributed to variations in reporting or data aggregation methodologies.
What to consider if you invest in Indonesia 2025?
When considering an investment in Indonesia in 2025, factors include the robust economic growth and investor-friendly policies, strategic industries like the digital economy and renewable energy, and regional economic differences across the archipelago. Key risks to consider involve currency fluctuations, global economic trends, and regulatory or bureaucratic hurdles.
Economic and political stability
- Steady economic growth: Despite global uncertainties, Indonesia’s economy is forecast to grow at around 5% in 2025, driven by strong domestic consumption and investment.
- Government policies: The government continues to implement reforms to attract foreign direct investment (FDI), including streamlined licensing processes through its Online Single Submission (OSS) system.
- Post-election policies: The direction of new policy following the 2024 elections, especially concerning fiscal discipline and infrastructure, will be important for sustained investor confidence.
Investment sectors with high potential
- Electric vehicles (EVs) and batteries: With the world’s largest nickel reserves, Indonesia is heavily promoting the EV battery industry and its supply chain. The government offers incentives, such as value-added tax (VAT) cuts for EVs, to attract investment.
- Digital economy and technology: Indonesia’s tech-savvy population and high internet penetration make the digital economy a key growth area. Opportunities exist in e-commerce, fintech, software as a service (SaaS), data centers, and cybersecurity.
- Renewable energy: The government’s goal to achieve net-zero emissions by 2060 has made the renewable energy sector a priority. Attractive investment prospects can be found in solar, geothermal, hydropower, and biomass energy. A new government regulation issued in 2025 provides clarity on guarantees for investors in this sector.
- Manufacturing: The government is encouraging high-value manufacturing to boost exports. Areas with strong potential include electronics, automotive components, and textiles, driven by competitive labor costs and supply chain reorganization.
- Healthcare and pharmaceuticals: Supported by national health coverage programs and an aging population, this sector offers investment opportunities in hospital infrastructure, telemedicine, and pharmaceutical manufacturing.
- Infrastructure and logistics: To support economic expansion, Indonesia is undergoing a major infrastructure push, including extensive toll road, seaport, and airport construction. The booming e-commerce market has further fueled demand for modern logistics and warehousing.
Regional economic analysis and key areas
Investment opportunities vary greatly by region, with specific areas offering different advantages:
- Java: The island of Java remains the economic powerhouse, contributing over half of the national GDP. Economic hubs like Jakarta, Surabaya, and Bandung continue to offer robust opportunities, especially in finance, services, and digital technology.
- Karawang (West Java): This industrial area, near Jakarta, is a favored location for foreign direct investment due to its strategic location and skilled workforce. It hosts major global manufacturers in the automotive and electronics sectors.
- Bali: This region is a perennial hotspot for the tourism and hospitality sectors, with opportunities in luxury resorts and eco-tourism.
- Other emerging areas: Outside of Java, cities like Medan and regions with abundant natural resources offer potential. For instance, areas rich in natural resources are prime for investment in downstream processing, particularly nickel processing plants for the EV industry.
Regulatory and market considerations
- Regulatory landscape: While investment policies are becoming more favorable, navigating local regulations and bureaucracy can be challenging. Partnering with local entities and consultants can help mitigate these risks.
- Foreign investment requirements: Foreign investors must set up a Foreign Investment Company (PMA) and comply with the Positive Investment List, which specifies sectors that are fully open, partially restricted, or entirely closed to foreign equity.
- Beneficial ownership: New regulations require corporations to implement beneficial ownership identification principles and report this information annually, increasing transparency.
- Foreign exchange rules: In 2025, new rules came into effect requiring exporters in the natural resource sectors to retain their foreign exchange earnings in the domestic financial system for a set period.
- Environmental, social, and governance (ESG): Due to increasing focus on sustainability, adhering to local environmental regulations is crucial for long-term investment success, particularly in sectors like palm oil and mining.
- Local culture and networking: Building trust and strong relationships with local businesses and government officials is a crucial part of doing business in Indonesia.
Investing in the Future: Navigating Indonesia’s Investment Path and Challenges with LMI Consultancy
For foreign firms, the investment opportunity in Indonesia is real, but so are the hurdles. Navigating the Omnibus Law on Job Creation, aligning with the Positive Investment List, and managing local partnerships in sectors from energy to telecom will require precision and local insight.
By combining regulatory expertise with a ground-level understanding of Indonesia’s evolving market, LMI Consultancy helps investors cut through red tape, identify viable provinces and align strategies with the country’s long-term development goals.
As capital becomes more selective and geopolitical headwinds persist, Indonesia’s growth story will favour investors who move with agility, discipline, and trusted local partners. In this environment, the difference between promise and payoff may come down to execution; and to who is guiding you through the terrain.
To ascertain your investment is handled by the right hands, contact one of our professional consultants now and get your FREE Consultation.
