McKinsey: Indonesia Ready to Enter a New Wave of Foreign Investment

Jakarta – Amid global geopolitical tensions and supply chain adjustments, McKinsey Global Institute assesses that Indonesia has a great opportunity to attract a new wave of foreign direct investment (FDI).

Explained by Khoon Tee Tan, McKinsey & Company Managing Partner and Senior Partner Indonesia, in the last 2-3 years, foreign investment flows to Indonesia have shown a significant upward trend. This is considered an opportunity to strengthen Indonesia’s position in the global market.

“I think this is actually a challenge as well as an opportunity for Indonesia to really start its own wave in attracting foreign direct investment,” Khoon said on Wednesday, April 30, 2025.

However, Khoon cautioned that Indonesia is not alone in attracting foreign capital. Many other countries are also competing to attract international investors amid the fast-changing world economic conditions.

According to him, there are 5 important aspects that need to be maximized, including access to domestic private capital and institutional credibility. This is key for Indonesia to remain competitive in the eyes of investors.

“We have to maximize capital. In my opinion, channeling through private credit in Indonesia is one of the best investment measures. If we don’t invest here, how will other countries come in,” Khoon said.

Khoon also highlighted the importance of institutional reform. By establishing conducive conditions and an attractive investment climate, Indonesia can become a regional investment growth center.

In addition, manufacturing and value-added services were cited as key areas of focus. The government needs to be sharper in determining priority sectors and skilled labor needs.

“I feel that developing human resources is also important and must be very focused on which sectors need to be encouraged, and what are the human resource gaps we face in these sectors,” he explained.

For information, a report from the Ministry of Investment said that in 2024, FDI entering Indonesia in 2024 reached USD55.3 billion. This figure is the highest record in recent years, growing 33.3 percent from the 2023 figure.

Not only that, total investment realization, including domestic sources, reached Rp1,714.2 trillion. This figure increased by 20.8 percent compared to the previous year. (*) Mohammad Adrianto Sukarso