Foreign Investment in Indonesia Decreases in Q2 2025, Domestic Investment Increases

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Adi Ahdiat 31/07/2025 10:20 WIB

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According to data from the Indonesian Investment Ministry, foreign direct investment (FDI) in Indonesia decreased in the second quarter of 2025, while domestic direct investment (DDI) increased.

Realization of Investment in Indonesia (Quarter I 2020 - Quarter II 2025)

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Realization of Investment in Indonesia (Quarter I 2020 - Quarter II 2025)

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According to the Investment Ministry's data, foreign direct investment (PMA) in Indonesia decreased in the second quarter of 2025, while domestic investment (PMDN) increased.

PMA refers to direct investment for business development in Indonesia originating from overseas, while PMDN comes from local investors.

Previously, during the 2020-2024 period, PMA generally exceeded PMDN. However, the trend changed from the beginning of this year.

In the first quarter of 2025, Indonesia's realized PMA fell by 6% compared to the previous quarter (quarter-on-quarter/qoq). On the other hand, PMDN rose by 13% (qoq), exceeding PMA in value.

A similar trend continued in the second quarter of 2025, where realized PMA fell again by 12% (qoq), while PMDN increased by 17% (qoq), creating an increasingly wider gap with PMA.

Here's a breakdown of the realized PMA and PMDN values in Indonesia over the last three quarters:

Foreign Direct Investment (PMA)

Quarter IV 2024: Rp245.8 trillion
Quarter I 2025: Rp230.4 trillion
Quarter II 2025: Rp202.2 trillion

Domestic Direct Investment (PMDN)

Quarter IV 2024: Rp207 trillion
Quarter I 2025: Rp234.8 trillion
Quarter II 2025: Rp275.5 trillion

According to Piter Abdullah Redjalam, Executive Director of the Segara Research Institute, Indonesia does need to strengthen PMDN.

"Actually, even a 30% growth in [PMDN] is highly insufficient to support economic growth. We need much higher PMDN growth than that," said Piter in an interview with Bisnis.com on Wednesday (30/7/2025).

Piter also assessed that PMDN can have a greater economic impact than PMA, because the profits from PMDN investments remain circulating domestically.

"When foreigners invest in Indonesia, we are happy that they come, open factories, and create jobs. However, ultimately, that investment [PMA] will generate a return, which will then flow overseas," he said.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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