Fact Check: Is Prabowo Right That Investment in Indonesia Created Millions of Jobs?
Fact check - Verification indicates that although investment in Indonesia is reported to have increased, it remains capital-intensive.
Indonesian President Prabowo Subianto asserted that investment in Indonesia continues to surge despite global instability, citing that realized investment in 2025 amounted to Rp1,931 trillion, resulting in over 2.7 million jobs. By the first half of 2026, investment reportedly exceeded Rp1,010 trillion, generating more than 1.4 million jobs.
Speaking at the 2026 MPR Annual Session on August 14, 2026, President Prabowo said, "Praise be to God, thanks to our hard work and the people's trust in the government, investment continues to grow amidst global uncertainty."
To verify these claims, Tempo examined official government data and consulted two economists. Their findings indicated that while investment indeed increased, the pattern was capital-intensive rather than labor-intensive. The Ministry of Investment's official figures for 2025 and the first half of 2026 showed realized investment of Rp1,931.2 trillion and Rp1,010 trillion, respectively.
However, these figures represented labor absorption—meaning the number of workers employed in investment projects—rather than new job creation.
Economic analyst Noval Adib from Brawijaya University in Malang highlighted the distinction between labor absorption and job creation. Labor absorption refers to workers employed in investment projects, including those who transitioned from other roles or were previously unemployed. In contrast, job creation refers to opening up new opportunities for job seekers who had not yet been absorbed into the workforce.
Therefore, substantial claims about the absorption of millions of workers do not necessarily imply that these are entirely new hires solely resulting from investment.
Esther Sri Astuti, Executive Director of the Institute for Development of Economics and Finance (INDEF), noted that capital inflows into Indonesia tend to be capital-intensive, predominantly involving the acquisition of fixed assets like machinery and high-tech equipment. This capital-intensive nature of investments does not necessarily translate into labor absorption, which is required for labor-intensive projects such as building factories and creating more jobs.
The data from the first quarter of 2026 revealed a sharp decline in labor absorption, dropping from 754,186 in the fourth quarter of 2025 to only 706,569.
Esther emphasized that investment realization should not solely focus on nominal figures but should result in high-quality investments that generate significant economic leverage. To increase labor absorption, the government should direct investment toward labor-intensive industrial sectors.
Written by urgent.news from Tempo.co English's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
