Investment Soars Past $96B but Formal Jobs Drop, Sounding Alarm for Business Lobby

JAKARTA, Investortrust.id — Surging capital inflows into Southeast Asia’s largest economy are running into a stark domestic paradox: while headline investment realization has crossed the Rp 1,500 trillion ($96.8 billion) mark, formal employment generation is retreating as workers increasingly spill into informal jobs.

Addressing journalists at the Kadin Tower in Jakarta on Thursday, Oct. 22, 2026, Indonesian Chamber of Commerce and Industry (Kadin) Chairman Anindya Bakrie pointed to a structural divergence in how capital inflows interact with national employment.

"Investments are rising, but formal employment is falling while the informal sector expands," Anindya said on Thursday. "Rather than simple cause-and-effect, we are witnessing a phenomenon where both developments are occurring at the same time."

The Capital-Intensive Tilt

The underlying issue lies in the structural composition of incoming funds. Over recent quarters, investment allocations have concentrated heavily in capital-intensive developments such as data center campuses, heavy smelters, and resource-processing facilities. While essential for building long-term industrial infrastructure, these advanced facilities absorb comparatively fewer direct workers than traditional assembly corridors.

To reverse the trend, Anindya urged the government to direct incentives toward labor-intensive industries capable of absorbing substantial payrolls, citing agriculture, plantation crops, fisheries, garments, footwear, furniture, and coffee processing. Expanding these traditional sectors, he noted, would simultaneously support Indonesia's non-commodity export drive.

"Investment strategies must evaluate their actual contribution to job creation, rather than measuring success purely by the sheer volume of incoming capital," Anindya stated.

Formalizing the Grassroots Economy

Beyond attracting greenfield factories, the business chamber called for structural interventions to transition informal micro-enterprises into the formal economy. Expanding access to official Business Identification Numbers (NIB), backed by technical mentoring and regulatory support, serves as the primary mechanism to upgrade worker protections and lift operational competitiveness.

"Kadin is focused on providing mentorship and training so informal workers can transition into the formal economy, allowing us to upgrade national competitiveness," Anindya said.

M. Azis Syamsuddin, Chairman of the Steering Committee for Kadin's 2026 National Leadership Meeting (Rapimnas), added that legal certainty and consistent regulatory enforcement remain paramount to sustaining high-quality capital formation.

"Legal enforcement must operate through proper, predictable mechanisms," Azis said. "When prospective investors look from a helicopter view, they must see that the rule of law functions consistently."

Nine-Month Investment Pace Hits 75% of Target

The lobby's assessment follows official data from the Ministry of Investment and Downstreaming/BKPM confirming resilient headline investment figures.

Minister of Investment and Downstreaming Rosan Roeslani reported that cumulative direct investment reached Rp 1,539.2 trillion ($96.8 billion) from January through September 2026, marking a 7.3% year-on-year increase. Third-quarter realization alone reached Rp 528.7 trillion ($33.25 billion).

Speaking after a cabinet consultation with President Prabowo Subianto at the Merdeka Palace on Tuesday, Oct. 20, 2026, Rosan confirmed that nine-month capital inflows have fulfilled 75.4% of the administration's full-year 2026 investment benchmark of Rp 2,041.3 trillion ($128.38 billion). Balancing those incoming investment totals with broad-based formal hiring will stand as a key challenge for economic policymakers heading into the final quarter.