Indonesia’s FDI to hit 1.4% GDP in 2025: World Bank
Indonesia's foreign direct investment (FDI) could go up to 1.4 % of its gross domestic product (GDP) in 2025, according to a recent report by the World Bank (WB).
An aerial view of Jakarta, Indonesia (Photo:Indonesia Expat)
Jakarta (VNA)🧸 - Indonesia'sforeign direct investment (FDI) could go up to 1.4 % of its gross domesticproduct (GDP) in 2025, according to a recent report by the World Bank(WB).
The WB attributed this uptick to the jobcreation law and the government's industrial downstreaming strategy ofprocessing raw minerals at home for greater added value. It forecast that thecountry’s FDI is projected to gradually pick up as theOmnibus Law on Job Creation and the Indonesian government's agenda to developthe downstream mining and mineral industries are implemented, reaching 1.4 % of GDP in 2025. Indonesia's net FDI is projected togrow to 1.3% of the country's GDP this year from 1.1% in 2022. Thebank has set the same 1.3% forecast for 2024. According to bank, based on multinationallender, an open market is a recipe for Indonesia to reach high-income status byits centenary in 2045. The bank stated Indonesia has had"historically restricted market competition" through regulation, thuspreventing productive firms and industries from growing. The job creationomnibus law is expected to remove some of these constraints, among others, byopening up previously restricted sectors for investors. Satu Kahkonen, the bank country director forIndonesia and Timor Leste, emphasised that Indonesia needs to enhancecompetition to spur the country's productivity growth. The job creation omnibuslaw liberalised private investments in the Indonesian economy. Kahkonen said Indonesia had a very largenumber of sectors that were closed or restricted for private investment. Thelaw package released those restrictions in one go. From now on,Indonesia needs to identify the specific constraints within policy areas orsectors that prohibit market contestability. He cited that the country needs to remove theremaining restrictions to competition that are embedded in businessregulations, procurement rules, international trade policies, labor marketregulations, and financial sector rules. The WB called Indonesia's financial sectoromnibus law "a major reform step". This package of regulations is setto improve access to finance for micro, small, and medium enterprises (MSMEs),among others, by allowing state-owned banks to write off MSMEs' non-performingloans./.
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An aerial view of Jakarta, Indonesia (Photo:Indonesia Expat) 
