August 18, 2026 | 12:02 pm
TEMPO.CO, Jakarta - Indonesian President Prabowo Subianto claimed that investment in Indonesia continues to grow amidst global uncertainty. He stated that realized investment throughout 2025 reached Rp1,931 trillion, creating over 2.7 million jobs. By the first half of 2026, realized investment reportedly surpassed Rp1,010 trillion, generating more than 1.4 million jobs.
“Praise be to God, thanks to our hard work and the people's trust in the government, investment continues to grow amidst global uncertainty,” President Prabowo said in his address at the 2026 MPR Annual Session on Friday, August 14, 2026.
Tempo verified these claims by examining official government data and interviewing two economists. The findings revealed that while investment increased as claimed, the pattern remained capital-intensive. In fact, labor absorption declined in the first quarter of 2026.
Labor Absorption Differs from Job Creation
The Ministry of Investment’s official website, in its January 15, 2026 edition, recorded realized investment of Rp1,931.2 trillion for 2025, while investment for the first half of 2026 reached Rp1,010 trillion. However, contrary to Prabowo's claims, the Ministry of Investment recorded the figures of 2.7 million and 1.4 million as the workforce absorbed—not as new jobs created.
Noval Adib, an economic analyst from Brawijaya University in Malang, emphasizes the fundamental difference between these two terms. Labor absorption refers to the number of workers employed in investment projects, comprising both those transferring from other roles and those who were previously unemployed.
Job creation entails opening up new opportunities for job seekers who have not yet been absorbed into the workforce. "So, if there is a claim regarding the absorption of millions of workers, it does not necessarily mean these are entirely new hires resulting solely from investment," Noval told Tempo via WhatsApp on Saturday, August 15, 2026.
Investment Rises, Labor Absorption Declines
Esther Sri Astuti, Executive Director of the Institute for Development of Economics and Finance (INDEF), observes that capital inflows into Indonesia tend to be capital-intensive. Investments are dominated by the acquisition of fixed assets—such as machinery and high-tech equipment—rather than labor absorption.
"It is not labor-intensive investment—such as building factories—that requires a large workforce," Esther stated in a written message on Saturday, August 15, 2026.
This capital-intensive tendency is reflected in the declining trend of labor absorption. In the first quarter of 2026, labor absorption stood at only 706,569 people—a sharp drop from the 754,186 recorded in the fourth quarter of 2025.
A graph showing investment growth versus the number of jobs created. Credit: Ministry of Investment/BKPM.
Esther emphasized that investment realization should not merely chase nominal figures; instead, it must be of high quality and generate significant economic leverage. To boost labor absorption, the government should direct investment toward labor-intensive industrial sectors.
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