Indonesia’s Minister of Investment, Rosan Roeslani, highlighted the paradox of the country’s economic stature within ASEAN and the distribution of regional investments, with a significant portion bypassing Indonesia for Singapore.
At a finance ministry event in Jakarta on September 24, 2024, Minister Rosan Roeslani discussed the disproportionate investment flow within ASEAN. Despite Indonesia being the bloc’s largest economy, much of the investment is funneled into Singapore.
Rosan reported that nearly half of the nearly $300 billion investment within ASEAN is directed to Singapore, with only about 10% entering Indonesia. This is in stark contrast to Indonesia’s dominance in both economic size and population within the region.
Indonesia constitutes roughly 40% of both the ASEAN economy and its population, demonstrating its pivotal role in the region which has not been reflected in its share of foreign direct investments (FDI).
With ongoing efforts to transition from a middle-income to a high-income nation, Rosan emphasized the critical need for increased foreign investment to support this progression.
Investment plays a substantial role in Indonesia’s growth, contributing about 28% to the economy, compared to 54-55% from domestic consumption, highlighting the need for balanced economic development strategies.
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Indonesia is currently benefiting from a demographic dividend, which is expected to peak around 2039-2040. This period is viewed as a crucial window to leverage for escaping the middle-income trap.
The distribution of investments within ASEAN highlights a critical need for Indonesia to enhance its attractiveness to foreign investors to realize its economic potential and maintain its regional leadership.
Despite its significant economic footprint in ASEAN, Indonesia faces challenges in attracting investments comparable to Singapore. Minister Rosan Roeslani calls for strategic initiatives to harness Indonesia’s full potential and advance beyond the middle-income status.
Source: CNBC Indonesia (2024)
