The drop in net liability was caused by an increase in the foreign financial assets (FFA) position, which surpassed an increase in the foreign financial liabilities (FFL) position.
Jakarta (ANTARA) - Indonesia’s international investment position recorded a net liability of US$264.1 billion, or 23.8 percent of the national gross domestic product (GDP) in the second quarter of 2021, Bank Indonesia (BI) has said.

The net liability showed a decline compared to the previous quarter, when it was recorded at US$267.5 billion, or 25.2 percent of the GDP, it added.

“The drop in net liability was caused by an increase in the foreign financial assets (FFA) position, which surpassed an increase in the foreign financial liabilities (FFL) position,” executive director and chief of BI's communication department Erwin Haryono said in a written statement released on Friday.

The increase in the FFA position was aided by direct investment asset transactions and other investments, he informed. As a result, it grew 1.2 percent to US$415 billion at the end of the second quarter of 2021 from US$410.2 billion at the end of the previous quarter, he said.

In addition, the rise in the FFA position was also fueled by revaluation caused by the depreciation of the US dollar against global major currencies and a rise in share indices in most countries where the assets are placed, Haryono said.

Meanwhile, the increase in the FFL position was caused by an inflow of foreign direct investment and portfolio investment, he informed. Consequently, it rose by 0.2 percent to US$679.1 billion in the second quarter of 2021 from US$677.7 billion in the previous quarter, he said.

"The rise in the FFL position was chiefly caused by a rising inflow of foreign direct investment and portfolio investment, along with investors’ positive perception of good prospects of the domestic economy,” he elaborated.

Yet, a further increase in the FFL position was obstructed by the negative revaluation of the domestic financial instrument as a result of a decline in the prices of several domestic companies’ shares, Haryono said.

BI believes the development of the country’s international investment position in the second quarter remains under control and supports external resilience, as reflected by the structure of the international investment position, which is dominated by long-term instruments, he added.

Looking ahead, the performance of the international investment position can be maintained in line with the effort to recover the national economy from the COVID-19 pandemic, supported by the synergy between the central bank, government, and other related authorities, he said.

"After all, BI will keep monitoring the potential risk of the net liability of the international investment position to the economy,” he added.

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Translator: Agatha Olivia V, Suharto
Editor: Sri Haryati
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