Amidst the storm of global political uncertainty and the looming economic slowdown, Indonesia is showing a surprising anomaly. The wave of investment into Indonesia has actually soared beyond the target, providing fresh air for economic growth.
Investment realization in Indonesia showed an impressive performance in the second quarter of 2025, with achievements of Rp 477.7 trillion. This figure marks a significant increase of 11.5% compared to the same period last year of Rp 428.4 trillion.
Thus, the total investment realization throughout the first semester of 2025 has reached Rp 942.9 trillion, or almost 50% of the government's target of Rp 1,905.6 trillion for 2025.
This increase is a breath of fresh air amidst the dynamics of global geopolitics and geoeconomics which are full of challenges. Because, the investment opened up 1.25 million jobs.
Minister of Investment and Downstream Affairs/Head of BKPM, Rosan Perkasa Roeslani, expressed his gratitude for this achievement. "Alhamdulillah, we have fulfilled the target that we set. Amidst the increasing geopolitical and geoeconomic challenges, the trust that has been built in Indonesia has enabled us to deliver in accordance with what the government has planned," he said in a press conference in Jakarta (29/7/2025).
According to Rosan, the government's active role, especially the President's visits to various countries, has helped build investor confidence. He also highlighted the role of Domestic Investment (PMDN) which now contributes more, at 57.7% or IDR 275.5 trillion, compared to Foreign Investment (PMA) at 42.3% or IDR 202.2 trillion. "This increase domestically is actually quite good," he added.
Investment as a support for growth, but the 8% target is still far off
In line with Rosan's optimism, Economist at the Institute for Development of Economics and Finance (Indef), Eko Listiyanto, appreciates BKPM's performance. "Of course, I appreciate BKPM's synergy in achieving almost 50% of the annual target. In fact, the economy is actually slowing down. So this is actually positive news amidst the global economic slowdown," he told SUAR, (7/29/2025).
However, he provided a realistic view regarding the government's targeted 8% economic growth. "Even though this has reached, let's say, almost 50%, to pursue 8%, the investment needed is many times greater. So it's still quite far to reach 8%," he explained.
Eko added that the current investment realization is more likely to support growth in the range of 5%. 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 PMDN and PMA, not solely government spending or the state budget. "The government needs to support the strategies carried out by BKPM to encourage increased investment realization, because this is very necessary for us to move towards better growth," he said.
A glimmer of hope
Chairman of the Indonesian Employers' Association (Apindo), Shinta W Kamdani, said that amidst 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 Affairs/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, throughout 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 centered in certain areas.
"In this stressful situation, the business world is not enough to just be spectators or policy implementers. We must become active partners of the government in solving national challenges. Apindo's 34th Rakerkonas is a space for strategic consolidation between national and regional business actors, as well as a forum for dialog that provides solutions with the government so that Indonesia is truly ready to welcome the vision of a Golden Indonesia 2045. This is the spirit of Indonesia Incorporated that we continue to encourage," said Shinta.
Challenges of investment conversion and the importance of legal certainty
Although initial investment commitments and realizations look strong, Eko from Indef highlighted the next crucial challenge, namely the execution or conversion of investment into Gross Domestic Product (GDP). Investors who have obtained principal permits at the central level 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. Local governments must be pro-investment. Don't let it be that formally the costs of establishing factories and so on are easy to permit, but there are many non-formal levies. The costs that people call thuggery costs must also be suppressed," he advised.
Furthermore, Eko emphasized the importance of legal certainty. This is not only about criminal issues, but also fundamental things such as a clear spatial plan (RTRW) for industrial land, and transparency of legal costs.
"Legal certainty regarding land must be clear. In addition, the bureaucracy in the regions must be investor friendly, helpful, and not look for faults that could become loopholes for unhealthy negotiations," he asserted.
Overall, the increase in investment in Indonesia in 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 supported by strong legal certainty to attract and retain capital.
