Net Liabilities of Indonesia’s International Investment Position Decreased - Bank Sentral Republik Indonesia
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July 11, 2020

Indonesia's International Investment Position (IIP) recorded a decrease of net liabilities at the end of Q1/2020. Indonesia’s IIP at the end of Q1/2020 recorded a net liabilities of USD253.8 billion (22.5% of GDP), lower than the net liabilities of USD339.4 billion (30.3% of GDP) at the end of Q4/2019. The decrease was attributable to a more significant decrement in the Foreign Financial Liabilities (FFL) position compared to the decrease in Foreign Financial Assets (FFA) position.

 Lower Indonesia’s FFL position primarily backed by portfolio investment, in line with foreign capital outflows in Q1/2020 as a response to the global uncertainty towards the COVID-19 pandemic. At the end of Q1/2020, the FFL position down by 13.5% (qtq), from USD712.9 billion to USD616.4 billion. The decrease in FFL position was primarily caused by net outflows of portfolio investment transaction, especially domestic government securities and stocks. The decreasing FFL position also influenced by revaluation of rupiah-denominated investment instruments in line with lower Jakarta Composite Index (JCI) and rupiah depreciation against US dollar.

 Indonesia’s FFA position decreased due to the FFA transaction in the form of reserve asset. The FFA position at the end of Q1/2020 down by 2.9% (qtq) from USD373.4 billion in Q4/2019 to reach USD362.6 billion. Apart from transaction factor, the decreasing FFA position also backed by revaluation factor due to the US dollar appreciation against several major currencies and decreasing average stock index in countries receiving resident investment.

Bank Indonesia views that the Indonesia’s IIP at the end of Q1/2020 relatively solid. This condition indicated by the lower net liabilities of IIP compare to the previous quarter. In addition, Indonesia's IIP liabilities structure also dominated by long-term instruments. Nevertheless, Bank Indonesia will remain vigilant on the risk of IIP net liabilities to the economy. Going forward, Bank Indonesia believes that Indonesia’s IIP performance will improve further, congruent with maintained economic stability and persistence recovery of Indonesian economy post COVID-19, supported by consistency and synergy of Bank Indonesia policy mix, fiscal policy, and structural reforms.

Further information is presented in the Q1/2020 Indonesia’s IIP Report on the Bank Indonesia website.

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Onny Widjanarko
Executive Director  
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