Indonesia’s International Investment Position Was Relatively Stable - Bank Sentral Republik Indonesia
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June 06, 2020
Indonesia's International Investment Position (IIP) was relatively stable in the third quarter of 2018. Indonesia's IIP as at the end of third quarter of 2018 recorded a net liability of USD297.0 billion (28.5% of GDP), relatively unchanged from that at the end of the previous quarter. The development was in line with the slightly higher Foreign Financial Liability (FFL) position compared to the increase in the Foreign Financial Asset (FFA) position. 
Indonesia's FFL position increased along with the influx of foreign capital inflows. Indonesia’s FFL position at the end of third quarter of 2018 rose USD1.6 billion or 0.3% (qtq) to USD633.6 billion. The increase was driven by the influx of foreign capital flows, mostly in the form of direct investment and other investments, reflecting optimism on the domestic economic performance. Further increase in the FFL position was restrained by the strengthening of the US dollar against the rupiah resulted with a decline in the value of the rupiah-denominated investment instruments.
Indonesia's FFA position increased mainly due to acquisition of other investment assets. Indonesia’s FFA position at the end of the third quarter of 2018 rose USD1.5 billion or 0.5% (qtq) to USD336.6 billion. In addition to other investments, the acquisitions of direct investment and portfolio investment assets were also contributed to the increased of FFA position.
Bank Indonesia views that the development of Indonesia’s IIP at the end of the third quarter of 2018 remained healthy. This is reflected in the relatively stable ratio of Indonesia’s net IIP liability to the GDP in the average range of peer countries around 29%. In addition, the structure of Indonesia's net liability position was dominated by long-term instruments. Nevertheless, Bank Indonesia will remain vigilant on the risk of Indonesia’s net IIP liability position to the economy. Going forward, Bank Indonesia believes that Indonesia’s IIP performance will improve further in line with maintained economic stability and continued recovery of Indonesia economy, supported by consistency and synergy in the policy mix of monetary, fiscal, and structural reforms.
Further information is presented in the Q3/2018 Indonesia’s IIP Report on the Bank Indonesia website.  


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