TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati warns that the low Gross Fixed Capital Formation (GFCF), or investments during the first quarter of 2025 is something to be wary about. Recording only 2.12 percent growth, the figure is "very weak" compared to the 5.03 percent growth in the fourth quarter of 2024.
"If we are aiming for 5 percent economic growth, investments usually must also grow by 5 percent, because investments contribute to 28 percent of our gross domestic product," she said during a working meeting with the House Commission XI at the Parliament Complex, Jakarta, on Thursday, July 3, 2025.
The government itself is pursuing 5.2 to 5.8 percent growth in 2026, thus, the minister said, investments must triple the current rates. The investment target in 2025 is 4.5 to 4.7 percent and 6.5 to 6.8 percent for the following year.
Sri Mulyani also underscored Danantara's key role in driving investments in Indonesia. "Danantara could become a catalyst if it's able to attract the private sector," she said, because if not, the sovereign wealth fund will instead trigger crowding-out.
The former Managing Director of the World Bank also said that the government will continue to improve various factors to drive up investments, including fiscal incentives and accelerating foreign direct investment in priority sectors.
She also highlighted deregulation as one of the contributing factors to investments, giving an example of the relaxed policies on subsidized fertilizer distribution.
The head of Statistics Indonesia (BPS), Amalia Adininggar Widyasanti, previously said that the uncertainty in the global economy also contributed to the low investments in the first quarter of 2025. "GFCF slowed down because there is a possibility that investors chose to wait and see amid global uncertainty," she said in a press conference on Monday, May 5, 2025.
Meanwhile, the chair of the Indonesian Employers' Association (Apindo), Shinta Kamdani, reckoned domestic uncertainty also played a role in the weak investor demand. In addition, inconsistent policies and slow deregulation implementation made business players reluctant to take risks.
Riani Sanusi Putri contributed to the writing of this article.
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