At the end of the second quarter (Q2) of 2020, Indonesia’s IIP registered a net liability totaling US$280.8 billion, or 25.7 percent of the GDP, increasing from US$256.6 billion, or 22.8 percent of the GDP, at the end of the previous quarter, Widjanarko noted in a statement in Jakarta, Saturday.
The increase stemmed from a larger increment of Foreign Financial Liabilities (FFL) than the Foreign Financial Assets (FFA).
Indonesia’s higher FFL position was mainly triggered by an influx of foreign capital in portfolio investment and direct investment into the domestic financial market in line with less uncertainty of global financial markets during the reporting period.
Indonesia’s FFL position in the second quarter of 2020 climbed 6.3 percent (qtq), from US$620.7 billion to US$659.6 billion.
The rising FFL was primarily attributed to an increase in foreign ownership position in government and private sector debt securities as well as larger equity capital transactions from affiliates.
A positive revaluation of rupiah-denominated investment instruments in line with the Jakarta Composite Index (JCI) rally and the rupiah’s appreciation against the US dollar also contributed to Indonesia’s higher FFL position.
Indonesia’s FFA position expanded primarily driven by reserve assets. At the end of Q2 of 2020, the FFA position grew 4.0 percent (qtq), from US$364.1 billion to US$378.8 billion.
In addition to transaction factors, the FFA gain was also prompted by a positive revaluation caused by rising average stock indexes in most investment placement destination countries coupled with a broad-based US dollar depreciation against major global currencies.
BI views that Indonesia’s IIP at the end of Q2 of 2020 had remained solid. This condition is indicated by Indonesia’s IIP liabilities structure dominated by long-term maturity instruments.
Nevertheless, BI will remain vigilant over the risk of IIP net liabilities to the economy.
Going forward, BI believes that Indonesia’s IIP performance will be maintained in line with the effort to spur economic recovery during the COVID-19 pandemic, supported by the synergy of Bank Indonesia’s policy mix and government policy, and other relevant authorities.
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Reporter: Azis Kurmala
Editor: Fardah Assegaf
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