FDI Realization Strengthens, but Extra Work Needed to Achieve 2025 Target

Investment realization from quarter to quarter has always grown positively. However, after the realization of foreign investment slowed down in the first and second quarters, extra work is needed to achieve the target of nearly Rp 2,000 trillion this year.

Zikrina Ratri
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2 Minutes
By: Zikrina Ratri
FDI Realization Strengthens, but Extra Work Needed to Achieve 2025 Target

Indonesia's investment realization until the third quarter of 2025 reached IDR 1,434.3 trillion or 75.3% of the target. Domestic investment (PMDN) dominated the realization with a proportion of 55.1%. However, foreign investment (FDI) realization in the third quarter grew at a higher rate of 4.8% after two previous quarters of decline.

Investment realization in the third quarter of 2025 reached IDR 491.4 trillion, an increase of 2.8% compared to the previous quarter. This achievement increased by 13.9% on an annual basis (y-on-y). The total accumulated investment realization until the third quarter has reached IDR 1,434.3 trillion, equivalent to 75.27% of the annual target. To achieve the 2025 investment target of IDR 1,905.6 trillion, investment realization in the fourth quarter must be at least IDR 471 trillion. This figure is slightly lower than the realization in the third quarter.

The increase in FDI investment in the third quarter of this year by 4.8% was also followed by more labor absorption. A total of 28.1 thousand workers were employed in FDI projects, up 12.9% compared to the second quarter. Sectors related to the Metal Industry, Mining, Chemical and Pharmaceutical Industry, Warehouse Transportation, and other Services were the sectors that received the largest portion of FDI injections. More than 50% of FDI realization was disbursed to support these five sectors.

Although overall domestic and foreign investment realization showed a positive performance, the achievement of FDI realization faced challenges. When compared to the previous year, Indonesia's FDI realization during the first quarter actually declined by -1.4% (y-on-y).

The decline in FDI realization is also reflected in the trend of the five main countries of investors entering Indonesia. Singapore, for example, whose average investment in previous years reached USD $5 billion per quarter, is now only around USD $4 billion per quarter. 

The People's Republic of China (PRC), which had recorded an average of USD $2 billion per quarter, now shows realizations that no longer reach this figure in each quarter. A significant decline is also seen in the position of Japan, which since the second quarter of 2025 is no longer included in the list of the top five countries with the highest FDI realization in Indonesia.

Singapore was the country with the highest FDI realization in the first three quarters of 2025, with US$4.6 billion (Q1), US$4.2 billion (Q2), and US$3.8 billion (Q3). Followed by Hong Kong and China, which took second and third place with stable values of around US$2 billion and US$1 billion respectively.

Although this year's FDI realization is still low compared to 2024, the increase that occurred in the third quarter shows that foreign investors' interest in entering Indonesia is recovering. The attractiveness of investing in Indonesia is still there. Especially from major investors such as Singapore and China.

A more aggressive strategy is needed to achieve the realization of FDI in the fourth quarter of at least IDR 471 trillion. Restoration of foreign investor confidence must be done by simplifying regulations and accelerating licensing services.

Also with more targeted investment promotion to countries that are experiencing a decline in the value of investment realization in Indonesia. This effort is important not only to pursue the target, but also to ensure sustainable economic growth.

Data News Investment

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Zikrina Ratri
Zikrina Ratri

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