FDI Trends in Indonesia Under the Prabowo Administration

Overall FDI Performance

Indonesia's realized foreign direct investment has continued to grow under the Prabowo administration, with BKPM reporting that total realized investment — domestic and foreign combined — exceeded IDR 1,900 trillion in 2025. The foreign component has remained concentrated in capital-intensive sectors, particularly metals processing, electricity and renewable energy, and transportation infrastructure. While the headline numbers reflect genuine capital inflow, the composition matters more than the aggregate: FDI into downstream processing and infrastructure is qualitatively different from FDI into retail or services, carrying different employment multipliers, regulatory dependencies, and strategic sensitivities for the government.

Sector Prioritization Shifts

The most visible change from the Jokowi era is an intensified focus on food and agriculture alongside the continuation of the downstreaming agenda. Prabowo has declared food security a strategic priority, which has translated into government investment in irrigation, fertilizer supply chains, and land reclamation programs — creating procurement and infrastructure investment opportunities that did not feature as prominently in the previous administration's agenda. The food-related FDI opportunity is primarily in processing, cold chain logistics, and agri-tech rather than in primary agriculture, where foreign ownership restrictions remain substantial.

Renewable energy and the energy transition continue to draw FDI, though the pace of deal closure has been complicated by issues in power purchase agreement (PPA) pricing, grid connectivity for remote renewable projects, and the government's parallel commitment to maintaining coal's role in the energy mix through the medium term. The result is a sector where strategic interest is high but project-level execution requires careful navigation of regulatory and commercial variables.

Digital infrastructure — particularly hyperscale data centers — has emerged as a standout sector. Multiple major global cloud providers have announced or begun constructing large-scale data center facilities in Greater Jakarta and in the planned Nusantara capital zone, driven by both Indonesia's large and growing digital economy and the data localization requirements under the PDP Law, which create a structural demand signal for in-country infrastructure.

Source Market Dynamics

Singapore remains the single largest source of realized FDI by country of origin, a function of its role as a regional holding company hub rather than purely reflecting Singaporean capital. The more strategically significant trend is the continued growth of Chinese investment — particularly in nickel processing, EV battery supply chain components, and manufacturing — alongside an increase in Middle Eastern sovereign and institutional capital, partly channeled through Danantara co-investment structures. US and European investment, while present, has historically been underweight relative to the size of these economies' trade relationships with Indonesia, a gap that the ongoing trade agreement negotiations are partly designed to address.

Japanese investment has remained steady and concentrated in automotive manufacturing, chemicals, and infrastructure — with particular sensitivity to Indonesia's EV transition policy, given the significance of Japanese automakers in the Indonesian market and the government's stated targets for EV adoption and domestic production.

Danantara as a Structural Variable

Danantara's emergence as a co-investment platform means that foreign investors in priority sectors now have a potential government-linked co-investor that was not a structural feature of the previous framework. This cuts both ways. On the positive side, Danantara co-investment can provide political alignment, facilitate land and permit processes, and signal government commitment to a project's success. On the risk side, a Danantara co-investment stake means increased state involvement in operational governance, potential constraints on exit, and exposure to the governance and transparency concerns that independent analysts have flagged about the fund. Structuring the relationship carefully from the outset — including governance rights, exit mechanisms, and information covenants — is more important in a Danantara co-investment context than in a purely private-party transaction.

What Foreign Businesses Should Monitor

Three variables are most worth tracking for foreign businesses making or reviewing Indonesia investment decisions in 2026: the trajectory of the US-Indonesia and EU-Indonesia trade agreement negotiations, which will affect tariff-sensitive sectors substantially; the pace of Danantara's governance and disclosure evolution, which will determine how attractive Danantara co-investment structures are to foreign institutional capital; and the implementation pace of the PDP Law's enforcement provisions, which remain under development and will create new compliance obligations across virtually every sector with a digital component.