Indonesia’s FDI Contracts for Second Straight Quarter as Singapore Inflows Drop 26%

JAKARTA, Investortrust.id — Foreign direct investment (FDI) in Indonesia declined for a second consecutive quarter in the third quarter of 2025, reflecting weaker inflows from Singapore after two years of exceptional expansion.

Data from the Ministry of Investment and Downstreaming show FDI reached Rp 212 trillion in Q3 2025, down 8.9 percent from a year earlier. The contraction followed a 6.9 percent drop in Q2, confirming a cooling trend after record highs in 2024 when quarterly inflows exceeded Rp 230 trillion.

BKPM data compiled by Investortrust’s Datatrust unit reveal that Singapore, Indonesia’s top investment source, cut its investment by 25.9 percent year on year to US$3.82 billion, compared with US$5.15 billion in the same quarter of 2024.

Singapore traditionally acts as a financial hub and proxy for Indonesian conglomerates, where domestic capital is routed through Singaporean structures before being reinvested at home. The slowdown therefore likely reflects a pause in repatriated corporate funding after heavy expansion in 2023–2024.

Other major investors posted mixed results. Hong Kong rose 27.7 percent to US$2.69 billion, China grew 6.9 percent to US$1.86 billion, and Malaysia advanced 5.8 percent. By contrast, South Korea fell 14.3 percent and Australia 24.7 percent. Thailand recorded the strongest surge, leaping more than 260 percent to US$0.21 billion.

Despite the short-term cooling, Indonesia’s quarterly inflows remain well above pre-pandemic norms of Rp 90–110 trillion, underscoring a new structural floor for foreign capital formation.

Expanding to the nine-month view, total FDI reached Rp 644.6 trillion between January and September 2025, down 1.5 percent year on year. Domestic investment (PMDN) rose strongly to Rp 789.7 trillion, up about 30 percent, making up 55.1 percent of overall investment realization.

Combined foreign and domestic commitments brought Indonesia’s total investment to Rp 1,434.3 trillion, equivalent to 75.3 percent of the national target of Rp 1,905.6 trillion for 2025. The figure represented a 13.7 percent increase from the same period last year. 

Investment Minister and Head of BKPM Rosan Roeslani expressed optimism that Indonesia will meet its investment target for the year. “Looking at the trend so far, we believe we can achieve the investment target,” Rosan said.

Commenting on the FDI slowdown, Rosan emphasized the importance of strengthening Indonesia’s talent pool to support emerging industries. “Many foreign investors have approached me to ask about our talent pool. It is a crucial factor in their investment decisions,” he said.

Businesses have long complained about low skill levels, even among university graduates, citing persistent mismatches between education and industry needs. To address this issue — and as part of the government’s latest stimulus measures — the administration launched a government-funded internship program last month, aimed at helping fresh graduates transition more effectively into the workforce.

The ministry reported that investment projects during the 9-month period created 1,956,346 new jobs nationwide. Investment outside Java reached Rp 741.8 trillion, or 51.7 percent of total inflows, while Java accounted for the remaining Rp 692.5 trillion. West Java remained the top destination with Rp 218.2 trillion, followed by Jakarta, East Java, Central Sulawesi, and Banten.

Overall, the two-quarter dip signals a normalization phase rather than a reversal. With FDI stabilizing near historical peaks and domestic investors accelerating capital spending, Indonesia’s 2025 investment landscape remains one of resilience after consolidation.