This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Dinamika investasi RI: Cegah surut arus modal
8 May 2025
By Aziz Rahardyan, Anitana W. Puspa, and Rahmad Fauzan
Policy consistency in securing capital is facing a critical test. Over the past few weeks, investment ecosystems—both in financial markets and the real sector—have experienced turbulence. This instability is marked by significant capital outflows and growing obstacles for investment in various industries.
Last month, several of Indonesia’s ultra-high-net-worth individuals moved their assets abroad due to concerns over domestic stability. Fears surrounding political uncertainty, economic resilience, and fiscal strategies have driven this shift. Bloomberg reports indicate that Indonesian elites are reallocating their wealth into gold, real estate, cryptocurrency, and stablecoins such as USDT, transferring these assets to foreign jurisdictions. Individuals with net assets ranging from US$100 million to US$400 million have reportedly converted 10% of their holdings into digital currencies.
This trend aligns with findings from the Financial Transaction Reports and Analysis Centre (PPATK), which recorded outbound funds from Indonesia reaching Rp602 trillion in March 2025—virtually unchanged from February’s figure of Rp616 trillion. The phenomenon has persisted throughout the first four months of 2025. According to Bank Indonesia (BI), capital markets have seen a net selling pressure of Rp12.05 trillion in Bank Indonesia Rupiah Securities (SRBI). Non-resident net sell transactions in SRBI were recorded as Rp10.47 trillion on 11 April, Rp2.24 trillion on 17 April, and Rp7.44 trillion on 25 April. Meanwhile, capital outflows from the stock market have reached Rp49.56 trillion, with non-resident net sell transactions amounting to Rp5.73 trillion in the second week of April, increasing to Rp13.01 trillion in the third week, and dropping to Rp1.33 trillion by 25 April.
Investment struggles in the real sector further reflect the challenges at hand. Several companies have withdrawn planned investments, including LG, which cancelled its nickel battery project. Incoming investments have also faced disruptions. Automotive companies BYD and VinFast reported operational setbacks due to interference from certain community organisations. Both the large-scale financial capital outflows and stalled investments in the real sector carry serious consequences that should not be underestimated.
Sources consulted by Bisnis warn that rapid capital flight and outgoing funds could weaken the stability of the rupiah’s exchange rate. If this persists, BI may be forced to intervene, which could risk depleting Indonesia’s foreign exchange reserves. The obstacles facing investment in the real sector also pose significant threats. Failed or delayed factory investments hinder job creation, which in turn suppresses consumer purchasing power.
Secretary General of the Indonesian Young Entrepreneurs Association (Hipmi), Anggawira, argues that the ramifications of capital outflows and cancelled investments go beyond currency fluctuations. The effects extend to lost employment opportunities, disrupted consumer spending, and slower economic growth. He acknowledges that capital flight is largely driven by doubts over Indonesia’s political, social, and fiscal stability. Hipmi urges the government to implement three key strategic measures. First, improving political stability and business security—both central and regional governments must create an environment conducive to investment. Second, reformulating fiscal and financial strategies—fiscal resilience must be transparently communicated with clear risk mitigation plans. Third, restoring investor confidence through economic diplomacy and strong leadership—"This is not just about numbers; it’s about certainty in development direction, business support, and policy consistency," Anggawira told Bisnis on Tuesday (6/5).
Executive Director of the Indonesian Textile Association (API), Danang Girindrawardana, notes that today’s investment landscape threatens business expansion and workforce absorption. He warns that a weakened rupiah exacerbates cost pressures, making raw materials and auxiliary goods more expensive—ultimately constraining real-sector growth. "The reality is that there has been no major job creation, nor has large-scale manufacturing expansion taken place," he stated on Tuesday (6/5).
Head of the Centre for Industry, Trade, and Investment at the Institute for Development of Economics and Finance (Indef), Andry Satrio Nugroho, cautions that Indonesia’s capital flight is more than a standard market fluctuation. "This is a warning sign that should prompt government action. The rapid capital outflow and outgoing public funds indicate uncertainty about the domestic economy," he told Bisnis on Monday (5/6). Policymakers believe external factors also play a role in triggering capital flight and investment cancellations. One key contributor is the trade tariffs imposed by U.S. President Donald Trump, which have sparked widespread concerns among global investors.
Despite the turbulence, fiscal and monetary authorities remain confident that capital outflows will stabilise as trade negotiations progress. Encouraging signs have appeared in the government securities (SBN) market, which recorded net non-resident purchases totalling Rp23.01 trillion by the end of April 2025. This recovery was largely driven by net buying trends beginning in the third week of April (Rp3.28 trillion), rising to Rp11.13 trillion in the fourth week.
Bank Indonesia Communications Department Executive Director, Ramdan Denny Prakoso, reported that between 28 and 30 April 2025, the stock market experienced a minor net selling of Rp0.01 trillion. "However, non-residents recorded an aggregate net purchase of Rp4.15 trillion at the end of last month, consisting of Rp0.22 trillion in the SBN market and Rp3.95 trillion in SRBI transactions," Prakoso told Bisnis on Monday (5/5).
Further indicators suggest improving market conditions. Indonesia’s five-year credit default swap (CDS) premium—reflecting sovereign debt risk—stood at 97.18 basis points as of 1 May 2025, slightly higher than 93.98 basis points on 25 April but significantly better than the peak of 113.35 basis points on 10 April 2025. Febrio Kacaribu, Head of the Fiscal Policy Agency (BKF) at the Ministry of Finance, sees early signs of capital outflow stabilisation. He credits this to Indonesia’s swift engagement with U.S. stakeholders in negotiations. "The market is reacting positively to Indonesia’s negotiation efforts, and we hope this translates into an improving trend in capital inflows in the coming weeks," he stated on Tuesday (30/4).
Investors’ growing confidence in Indonesian securities is reflected in the ten-year SBN yield, which has improved from 7% in early April 2025 to 6.85% by the end of the month. This upward trend indicates strong investor interest in long-term Indonesian bonds.
Chairman of the Financial Services Authority (OJK), Mahendra Siregar, highlighted that despite global economic uncertainties, Indonesia’s stock market displayed resilience in the first quarter of 2025, even as market pressures intensified in late March. Following the Eid holiday, domestic stocks experienced sharp volatility, prompting a temporary trading halt on 8 April 2025. However, pressures have since eased, and by 22 April 2025, the IDX Composite Index (IHSG) had rebounded to 6,538.27, with a market capitalisation of Rp11,354 trillion.
Fundraising in the capital markets remained strong, with the first quarter of 2025 public offerings totalling Rp59.83 trillion, including Rp3.24 trillion from five newly listed companies. "There are still 77 upcoming public offering proposals in the pipeline, with an estimated indicative value of Rp54.09 trillion," Mahendra stated.
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