Amidst the looming storm of global political uncertainty and economic slowdown, Indonesia showed a surprising anomaly. The wave of investment into Indonesia actually surged beyond the target, providing a breath of fresh air to economic growth.

Investment realization in Indonesia showed an impressive performance in the second quarter of 2025, reaching IDR 477.7 trillion. This figure marks a significant increase of 11.5% compared to the same period the previous year of IDR 428.4 trillion.

Thus, the total investment realization during the first semester of 2025 has reached IDR 942.9 trillion, or almost 50% of the government's target of IDR 1,905.6 trillion for 2025.

This increase is a breath of fresh air in the midst of challenging global geopolitical and geo-economic dynamics. This is because the investment created 1.25 million jobs.

Minister of Investment and Downstream/Head of BKPM, Rosan Perkasa Roeslani, expressed his gratitude for this achievement. "Alhamdulillah, we have met the target we set. In the midst of course the geopolitical, geo-economic challenges that are on the rise, the trust that has been built in Indonesia so that we can deliver according to what the government has planned," he said at a press conference in Jakarta (29/7/2025).

According to Rosan, the active role of the government, especially the President's visits to various countries, helped build investor confidence. He also highlighted the role of Domestic Investment (PMDN) which now contributes more, at 57.7% or Rp 275.5 trillion, compared to Foreign Investment (PMA) at 42.3% or Rp 202.2 trillion. "This increase in the country is actually quite good," he added.

Investment to support growth, but 8% target is still a long way off

In line with Rosan's optimism, Economist of the Institute for Development of Economics and Finance (Indef), Eko Listiyanto, appreciated BKPM's performance. "Of course I appreciate that BKPM's synergy can reach almost 50% of the annual target. In fact, the economy is actually slowing down. So this is actually positive news amid the global economic slowdown," he told Suar, (29/7/2025).

However, he gave a realistic view of the government's 8% economic growth target. "Even though it has reached, let's say close to 50%, but to pursue 8%, the investment needed is also many times higher. So it's still a bit far to go to 8%," he explained.

Eko added that current investment realization is more likely to be a support for growth in the 5% range. Although, Indonesia's economic prediction for this year is still below 5% due to global and domestic pressures.

He also emphasized that to grow a more resilient economy, the spearhead is private investment, both domestic and foreign investment, not solely government spending or the state budget. "The government needs to support the strategies carried out by BKPM to encourage an increase in investment realization, because we really need this to lead to better growth," he said.

A glimmer of hope

Chairperson of the Indonesian Employers Association (Apindo) Shinta W Kamdani said, amid global and domestic complexities, the challenge of achieving investment realization is a hope for the business world and the economy.

Citing data from the Ministry of Investment and Downstream / Investment Coordinating Board (BKPM), investment realization in the second quarter of 2025, which reached IDR 477.7 trillion, increased from the first quarter of 2024 of IDR 465.2 trillion.

Cumulatively, during the first semester of 2025, total investment has reached IDR 942.9 trillion or 49.5% of the 2025 target, creating more than 1.2 million new jobs. The relatively even distribution of investment between Java (49.5%) and outside Java (50.5%) also shows that economic activity is not only concentrated in certain regions.

"In this stressful situation, it is not enough for the business world to be a spectator or policy implementer. We must become active partners of the government in solving national challenges. The 34th Apindo Rakerkonas is a strategic consolidation space between national and regional business actors, as well as a place for solutive dialog with the government so that Indonesia is truly ready to pick up the vision of a Golden Indonesia 2045. This is the spirit of Indonesia Incorporated that we continue to encourage," said Shinta.

Investment conversion challenges and the importance of legal certainty

While initial investment commitments and realizations look strong, Indef's Eko highlights the next crucial challenge, which is the execution or conversion of investment into Gross Domestic Product (GDP). Investors who have obtained principle licenses at the center need support from the regions to build their production facilities.

He added that capital efficiency in the regions, both formal and additional (non-formal) costs, must be ensured to be cheap and easy. "Support from the regions is very important. The local government must be pro-investment. Do not let the formal costs of establishing factories and so on have easy permits, but there are many non-formal levies. The costs of what people call thuggery costs must also be reduced," he said.

Furthermore, Eko emphasized the importance of legal certainty. This is not just about criminal issues, but also fundamentals such as a clear spatial plan (RTRW) for industrial land, and transparency of legal fees.

"The legal certainty of the land must be clear. In addition, the bureaucracy in the regions must be investor friendly, helpful, and not find fault that could be a loophole for unhealthy negotiations," he said.

Overall, the increase in investment in Indonesia by mid-2025 is an important achievement that provides great hope for economic growth. However, the challenge ahead is to ensure that this investment can be efficiently converted into job creation and real growth, with full support from local governments, and underpinned by strong legal certainty to attract and retain capital.