Indonesia Remains Attractive to Foreign Investors: Chatib Basri
Key Takeaways
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JAKARTA, investortrust.id — Indonesia remains an appealing destination for foreign investors, according to National Economic Council (DEN) member Chatib Basri, who pointed to a resilient economic performance in the first quarter of 2025 and favorable global dynamics.
“Indonesia is still a relatively attractive investment destination if you’re an investor looking for yield,” Chatib said during the DBS Asian Insights Conference in Jakarta on Thursday, May 22, 2025.
Indonesia posted year-on-year economic growth of 4.89% in the first quarter, reinforcing investor confidence despite global uncertainties, he noted.
China’s Production Shift Spurs Opportunity
Chatib highlighted the ongoing U.S.–China trade conflict as a catalyst for production relocation from China to Southeast Asia. He said Indonesia and Vietnam are two of the biggest beneficiaries of this trend.
However, he pointed out a crucial distinction: Vietnam’s trade surplus with the United States stood at around $120 billion, while Indonesia’s was just $19 billion in 2024. This smaller surplus makes Indonesia less vulnerable to U.S. pressure for trade rebalancing.
“In Vietnam’s case, they need to increase U.S. imports nearly 11 to 12 times to address the trade imbalance,” Chatib said. “Indonesia won’t face such a complex renegotiation.”
He emphasized that for Indonesia to truly capitalize on China’s industrial exodus, the government must implement broader economic deregulation to attract relocating firms.
Unlikely Tariff Risks from the U.S.
The second factor supporting Indonesia’s outlook is the unlikelihood of the United States imposing reciprocal tariffs on trade partners, Chatib argued.
“Reciprocal tariffs would only fuel inflation and slow down economic growth in the U.S.,” he said, adding that such a move would complicate the Federal Reserve’s decision-making process and raise the probability of a recession.
This expectation reduces policy risk for countries like Indonesia that depend on trade with the U.S.
Room for Rate Cuts Amid Low Inflation
Domestically, Chatib sees potential for further interest rate cuts by Bank Indonesia (BI). On Wednesday, May 21, the central bank reduced its benchmark interest rate by 25 basis points to 5.50%, also trimming its deposit and lending facility rates.
“There's still room for BI to cut rates,” he said.
He cited a lower interest rate could stimulate economic growth, especially as the rupiah has been strengthening. Second, inflationary pressure remains subdued, with headline inflation currently under 3%.