Why investors should not walk away from Indonesia now

Indonesia's October market challenges should not deter foreign investors, according to experts. While global index MSCI reviewed the country's market status and the Jakarta Composite Index dropped over 11 percent, these issues do not reflect the nation's strong fundamentals. Indonesia boasts the largest economy in Southeast Asia, with a GDP of approximately US$1.45 trillion in 2025, as per Statistics Indonesia and IMF data.

Growth in the second quarter of 2025 surpassed market expectations at 5.29 percent. The country also leads the region in digital economy development, accounting for nearly two-thirds of global nickel production last year, according to S&P Global. Notably, foreign investments have continued to flow in, with real investments totaling around $85 billion from January to September 2025, meeting three-quarters of the annual target.

In the second quarter of 2025, investors from Hong Kong, Singapore, China, Japan, and Malaysia accounted for about 80 percent of foreign investments. European companies, in particular, may be hesitant, questioning why Asian competitors remain confident in Indonesia. The Indonesian government estimates infrastructure needs of around $625 billion for 2025-2029, but public budgets can only cover approximately 40 percent of it.

Private capital is crucial for transport, power, water, and digital networks. In the electricity sector, the government's 2025-2034 plan aims for 69.5 gigawatts of new capacity, primarily renewables and storage, with a projected 65 percent increase in demand over the decade. Meeting this demand would require an additional 80 percent of Spain's annual electricity consumption.

This underscores the massive infrastructure boom Indonesia is experiencing, making it an attractive investment opportunity.