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View all search resultsForeign investors still weighing Prabowo's state-led approach
Foreign direct investment long accounted for half or slightly more than half of total investment in Indonesia, but the balance flipped this year.
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High-rise buildings are seen in the Sudirman Central Business District in South Jakarta on March 14, 2021. (AFP/Adek Berry)
F
oreign investors remain cautious about President Prabowo Subianto’s economic agenda, watching closely to ascertain whether his top-down investment push, in which state-owned enterprises (SOEs) assume a bigger role through state asset fund Danantara, will attract fresh capital.
While interpretations differ regarding the effect of his leadership style, representatives of foreign chambers of trade agree that the approach of Prabowo, a former military general, has a substantial impact on Indonesia’s investment and business climate.
“[Prabowo] makes a sharp departure from the previous president, defined by a bolder policy outlook and a noticeably more assertive and confident foreign policy,” Donna Priadi, managing director of the American Chamber of Commerce in Indonesia (AmCham), said during the launch of a joint United States-Indonesia investment report with the US Chamber of Commerce.
Indonesia’s “relatively weak institutional setting” gave the president “outsized power”, the report says, making policy highly dependent on the leader’s persona.
Read also: US, EU chambers slam Indonesia’s unfavorable business climate
Prabowo’s increasing reliance on military-linked institutions in sectors traditionally overseen by civilians signaled a shift toward “a more centralized, security-driven state apparatus”, which might complicate regulatory transparency, it added.
“It remains to be seen if his more state-led model, emphasizing the role of SOEs, will also substantially boost foreign investment,” the report notes.
