Indonesia’s Net International Investment Liability Position Increased - Bank Sentral Republik Indonesia
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December 10, 2019
​Indonesia’s International Investment Position (IIP) recorded an increase of net liabilities in Q2/2019, induced by a higher position of Foreign Financial Liabilities (FFL). At the end of Q2/2019, Indonesia’s IIP net liability stood at USD330.3 billion (31.0% of GDP), slightly higher than USD329.2 billion (31.3% of GDP) at the end of the previous period. The rise was triggered by a larger increment in the FFL position compared with the gain in Foreign Financial Assets (FFA).
 
Indonesia’s higher FFL position was primarily driven by an influx of foreign capital inflows in the form of portfolio investment. The inflows were bolstered by a promising domestic economic outlook and attractive domestic financial investment assets. At the end of Q2/2019, therefore, FFL had increased 0.4% (qtq) or by USD2.9 billion to a position of USD691.2 billion, which was also influenced by US dollar depreciation against the Rupiah that raised the value of Rupiah-denominated investment instruments. Further improvements were negated, however, by a negative revaluation of domestic financial instruments in line with the Jakarta Composite Index (JCI), which traded downwards in the reporting period.
 
Indonesia’s FFA position also increased due to a rising transaction of direct investment and other investment assets. At the end of Q2/2019, the FFA position climbed 0.5% (qtq) or by USD1.9 billion to total USD361.0 billion. The gain was supported by the rise of obligation price, higher average stock indexes, and weaker US dollar against several major global currencies in countries receiving FFA.
 
Bank Indonesia views that Indonesia’s IIP at the end of Q2/2019 remained healthy. Such developments were indicated by the domination of long-term instruments within the structure of Indonesia's IIP net liability. Nevertheless, Bank Indonesia will remain vigilant on the risk of Indonesia’s IIP net liability to the economy. Going forward, Indonesia’s IIP performance is expected to improve in line with sustained economic stability, supported by strengthening coordination between Bank Indonesia, the Government and other relevant authorities to stimulate domestic economic growth momentum through increasing domestic demand, boosting exports and tourism as well as attracting foreign capital inflows, including foreign direct investment (FDI).
 
Further information is presented in the Q2/2019 Indonesia’s IIP Report on the Bank Indonesia website. 
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