Global Economy Full Of Uncertainty, Apindo Does Not Support The Increase In Investment Flows To Indonesia

Rupiah (Photo: Antara)

JAKARTA - The Indonesian Employers' Association (Apindo) assesses that in the midst of global uncertainty, the increase in investment flows entering Indonesia is small.

Chairman of the Indonesian Employers' Association (Apindo) Shinta Kamdani said that the estimate of global economic growth remains below the average pre-pandemic growth until 2025, causing multiple down side risk, such as increasing volatile prices and food supply in the market as well as global energy.

"The business world considers that global conditions are not supportive for increasing investment in Indonesia," said Shinta in the 2024 Midyear Challenges Indonesia Business agenda, Monday, July 29.

Shinta said this creates potential for additional short inflation, especially in food and energy importing countries such as Indonesia and causes the monetary titanic and financial strap.

"The financial burden is prolonged and especially there has been a slowdown in terms of economic growth in key countries, especially the United States, China, and also some of Indonesia's trading partners such as Japan, UK and Germany, which have clearly experienced an economic crisis," he said.

With the global economic condition not yet improving, Shinta said that the impact would be felt on the Indonesian economy, especially the real loan interest rate, which is currently not competitive.

"Later there will also be an impact, especially I want to underline the yield loan interest rate, which may still be less competitive," he said.

Shinta said that further the effect of global uncertainty would make Foreign Direct Investment (FDI) that entered the country tend to decrease and Indonesia's export performance is also expected to be affected.

Our exports are also getting smaller, and our export demand is also decreasing. Plus there is an increase in cost (logistic) due to an increase in global fragmentation from geopolitical influences in the Middle East," he said.

Shinta explained that the impact of this global ban will not only reduce the entry of foreign investment, but also investments from within the country.

"So even though we really appreciate the government continuing to grow investment projections, I think there needs to be anticipation. Since the second quarter of 2023 there has been a weakening of FDI growth and export performance, which has caused the balance deficit to run," he said.