No. 27/51/DKom
Indonesia's International Investment Position (IIP) in the fourth quarter of 2024 recorded a lower net liability. At the end of the fourth quarter of 2024, Indonesia's IIP amassed a net liability totaling USD 245.3 billion, decreasing from USD 270.4 billion at the end of the third quarter of 2024. An increase in the position of Foreign Financial Assets (FFA), accompanied by a decrease in the position of Foreign Financial Liabilities (FFL), contributed to the lower net liability IIP in the reporting period.
Indonesia's higher FFA position was primarily driven by a higher position of reserve assets. The FFA position at the end of the fourth quarter of 2024 was recorded at USD 522.8 billion, up 0.6% (qtq) from USD 519.7 billion at the end of the third quarter of 2024. The higher FFA position was influenced by a larger asset placement, primarily in the form of reserve assets, followed by direct investment and portfolio investment. A further increase in the FFA position was restrained, however, by other change factors in line with broad-based US dollar appreciation against most global currencies, coupled with weaker stock indices globally.
Indonesia's FFL position decreased amid persistently solid foreign capital inflows in the form of direct investment and other investment. The FFL position at the end of the fourth quarter of 2024 retreated 2.8% (qtq) to USD 768.1 billion from USD 790.0 billion recorded at the end of the third quarter of 2024. The lower FFL position was influenced by a net outflow of portfolio investment in line with persistently high global financial market uncertainty. On the other hand, direct investment and other investment continued to record net inflows, thus reflecting maintained investor optimism in the promising domestic economic outlook and conducive investment climate. The FFL position was also influenced by the lower value of domestic financial instruments given broad-based US dollar appreciation against most global currencies, including the rupiah, and lower domestic share prices.
Overall, Indonesia also recorded a lower net liability position in 2024 compared with conditions at the end of 2023. Indonesia's net liability IIP decreased from USD 257.9 billion at the end of 2023 to USD 245.3 billion at the end of 2024. The decline recorded in Indonesia's net liability IIP stemmed from a USD 37.5 billion (7.7% yoy) increase in the FFA position that exceeded the USD 24.9 billion (3.4% yoy) increase in the FFL position. The higher FFA position was driven by increases across all FFA components, namely direct investment, portfolio investment, other investment, and reserve assets, while the higher FFL position was primarily influenced by foreign capital inflows in the form of direct investment, portfolio investment, and other investment.
Bank Indonesia views the recent developments in Indonesia's IIP in the fourth quarter of 2024 and overall in 2024 as remaining solid, thereby supporting external resilience. This was reflected by an improvement in the ratio of Indonesia's net IIP liability to GDP from 18.8% in 2023 to 17.6% in 2024. In addition, long-term maturity instruments (92.3%) continued to dominate Indonesia's liability IIP structure, primarily through direct investment. Moving forward, Bank Indonesia will remain vigilant of global economic dynamics that could impact the IIP outlook while strengthening the policy mix response supported by close synergy with the government and other relevant authorities to bolster external sector resilience. Moreover, Bank Indonesia will also monitor the potential risks posed by a net liability IIP on the domestic economy.
Further information is presented in Indonesia's IIP Report Q4/2024 on the Bank Indonesia website.
Jakarta 10th March 2025
Communication Department
Ramdan Denny Prakoso
Executive Director
