Indonesia’s International Investment Position in September Declines

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Indonesia’s International Investment Position (PII) in the second quarter of 2022 recorded a decrease in net liabilities. At the end of the second quarter of 2022, Indonesia’s PII recorded a net liability of US$270.4 billion (21.3% of GDP). This was conveyed by Bank Indonesia (BI).

The decrease in Indonesia’s international investment net liabilities came from the position decrease of Foreign Financial Liability (KFLN) accompanied by an increase in the position of Foreign Financial Assets (AFLN).

This figure is lower than net liabilities at the end of the first quarter of 2022 of US$ 287.8 billion (23.6% of GDP).

Head of the BI Communications Department Erwin Haryono said that the development of PII during this period was maintained and supported external resilience.

“This is reflected in the ratio of Indonesia’s PII net liabilities to GDP in the second quarter of 2022 which was maintained at around 21.3 percent, down from the ratio in the previous quarter of 23.6 percent,” he said in an official statement, Monday (26/26/2020). 9/2022).

In addition, Indonesia’s PII liability structure is also dominated by long-term instruments, amounting to 93.4 percent, mainly in the form of direct investment.

Erwin explained that the decrease in liabilities in September 2022 came from a decrease in the position of Foreign Financial Liability (KFLN) accompanied by an increase in the position of Foreign Financial Assets (AFLN).

Indonesia’s FFL position fell 2.3 percent from US$720.8 billion at the end of the first quarter of 2022 to US$704.3 billion in the second quarter of 2022.

“This decline was mainly due to other factors related to changes in the value of rupiah-denominated domestic financial instruments in line with the decline in prices and the strengthening of the US dollar against the rupiah,” he said.

On the other hand, at the end of the second quarter of 2022, the position of AFLN rose by 0.2 percent, from US$433.0 billion at the end of the previous quarter to US$433.9 billion.

This development was supported by the increasing position of portfolio investment assets and other investments in line with the increasing placement of assets abroad.

BI is optimistic that Indonesia’s PII performance will be maintained in line with efforts to recover the Indonesian economy from the impact of the Covid-19 pandemic, supported by the synergy of the BI and Government policy mix, as well as other relevant authorities.

“Nevertheless, BI will continue to monitor potential risks related to PII’s net liability to the economy,” Erwin said.