Alwi Shihab: Middle Eastern Investors Show Low Confidence in Indonesia

JAKARTA, investortrust.id - Former Foreign Minister Alwi Shihab underscores the limited trust Middle Eastern investors have in Indonesia’s investment climate, saying it poses challenges for the country’s competitiveness against other regional destinations. He stresses the importance of government action to attract more foreign capital and boost the nation’s economic growth.

On Thursday, Mar 13, 2025, at an iftar gathering hosted by the Indonesian Chamber of Commerce and Industry (Kadin) in the Aryaduta Hotel Ballroom, Menteng, Jakarta, Alwi elaborated on how neighboring Singapore has successfully attracted over 50% of the total US$200 billion worth of investment entering Southeast Asia. Indonesia, by contrast, only received approximately 10-11% of that amount, indicating that Middle Eastern investors remain cautious about Indonesia’s regulatory stability and investment policies.

“I must be honest. Trust from Middle Eastern investors in Indonesia is still quite low. They prefer Singapore, which manages to draw more than half of the entire US$200 billion investment into ASEAN. Meanwhile, Indonesia only secures around 10-11%,” Alwi said.

Alwi shared a conversation he had with Qatar’s Sheikh Hammad Bin Jassim Al-Thani, who explained that while there is some investment channeled to Indonesia, much of the funding is routed through Singapore. This preference stemmed from perceptions of a less favorable investment environment in Indonesia and a lack of foreign governmental confidence in the country’s economic stability and regulations.

Alwi further pointed out that this pattern demonstrates how most investors, particularly those from overseas, are inclined to place their money in places they consider safer and more stable. He emphasized that unless government policies can assure predictability and combat systemic issues such as corruption, foreign investors will look elsewhere.

However, Alwi said he remains optimistic, noting that under President Prabowo Subianto’s administration, meaningful reform could enhance Indonesia’s investment climate. He hoped that significant progress in eradicating corruption and improving investment regulations would encourage more investors, especially those from the Middle East, to enter the Indonesian market.

“Through President Prabowo, I hope all approaches to fostering confidence in the investment climate will also be improved,” he noted.