Indonesia's International Investment Position Quarter III-2024 Reaches 274.0 Billion US Dollars

JAKARTA - Bank Indonesia (BI) reported that Indonesia's International Investment Position (PII) in the third quarter of 2024 recorded an increasing net obligation.

Executive Director of the BI Communication Department, Ramdan Denny Prakoso, said that at the end of the third quarter of 2024, PII Indonesia recorded a net obligation of 274.0 billion US dollars, higher than net obligations at the end of the second quarter of 2024 of 249.8 billion US dollars.

"The increase in net obligations stems from the increase in the position of Foreign Financial Obligation (KFLN) which exceeds the increase in the position of Foreign Financial Assets (AFLN)," he said in his statement, Wednesday, December 4.

Denny conveyed that Indonesia's AFLN's increasing position was driven by an increase in population investment in various foreign financial instruments.

The position of AFLN at the end of the third quarter of 2024 was recorded at USD 518.2 billion, up 5.3 percent (qtq) from USD 492.2 billion at the end of the second quarter of 2024.

According to Denny, all AFLN components recorded an increase in position, with the largest increase in foreign exchange reserves assets, other investments, and direct investments.

"The increase in AFLN's position is also influenced by the increase in prices and the weakening of the US dollar exchange rate against several state currencies in placement of assets," he explained.

Denny said that the position of KFLN Indonesia was also increasing, supported by an increase in foreign capital inflows in direct investments and portfolio investments.

This is reflected in the position of KFLN at the end of the third quarter of 2024 which was recorded at US$792.2 billion, up 6.8 percent (qtq) from US$742.0 billion at the end of the second quarter of 2024.

According to Denny, this development is mainly supported by direct investment and portfolio investment which records an increase in surpluses as a reflection of Indonesia's economic growth prospects that remain good, low inflation, and attractive returns.

"The increase in KFLN's position is also influenced by the weakening of the US dollar exchange rate against the majority of global currencies, including Rupiah, as well as the increase in stock prices in Indonesia," he said.

Denny conveyed that BI views that Indonesia's PII development in the third quarter of 2024 will be maintained so as to support external resilience.

This is reflected in Indonesia's PII ratio to GDP in the third quarter of 2024 which was maintained at 19.9 percent.

In addition, Denny conveyed that the structure of Indonesia's PII obligations was also dominated by long-term instruments (92.3 percent), especially in the form of direct investment.

In the future, He said, BI always pays close attention to the dynamics of the global economy that can affect Indonesia's PII prospects and continue to strengthen the policy mix response supported by policy synergies with the Government and relevant authorities, in order to strengthen the resilience of the external sector.

"BI will continue to monitor potential risks related to PII's net obligations to the economy," he concluded.