The net liability of Indonesia’s IIP in 2020 was US$280 billion, or 26.4 percent of the GDP.
The decline in the net liability of IIP in 2021 was fueled by a rise in foreign financial assets (AFLN), which surpassed an increase in foreign financial liabilities (KFLN), executive director /chief of BI’s communication department, Erwin Haryono, said in a statement released on Friday.
In 2021, AFLN rose US$26.5 billion, or 6.6 percent (year-on-year/yoy), fueled by other investment assets and foreign exchange reserves, while KFLN increased US$25.1 billion or 3.7 percent (yoy), driven by direct investment and portfolio investment liabilities.
Hence, the net liability of Indonesia’s IIP rose to US$278.6 billion or 23.5 percent of the GDP in the fourth quarter of 2021 from US$277.3 billion or 24.2 percent of the GDP in the third quarter of 2021.
He attributed the rise in the net liability of IIP in the fourth quarter of 2021 to the increase in the KFLN position and the decline in the AFLN position
The KFLN position in the fourth quarter of 2021 grew 0.1 percent to US$709.6 billion compared to US$709.2 billion in the third quarter of 2021.
The increase was fueled by direct investment inflows in the form of equities along with investor optimism about the prospects for domestic economic recovery, among others.
In addition, it resulted from the positive revaluation of domestic financial instruments influenced by the improving performance of shares and the appreciation of the rupiah’s exchange rate against the US dollar.
Meanwhile, the AFLN position in the fourth quarter of 2021 fell 0.2 percent to US$431 billion from US$431.9 billion in the previous quarter.
The drop in other investment assets was caused by the withdrawal of the domestic private sector’s savings in overseas banks along with funding needs for economic activities and a decline in foreign exchange reserves due to government debt repayments.
The decline in the AFLN position was hindered by positive revaluation due to an increase in the average share index and other asset prices in the countries of placement.
Thus, BI said it believes that the development of IIP in the fourth quarter of 2021 and throughout 2021 remained manageable and supported external resilience, as reflected by the ratio of IIP to the GDP in 2021, which showed a decline compared to 2020.
In addition, the liability of Indonesia’s IIP was 93.9 percent dominated by long-term instruments, particularly in the form of direct investments.
Looking ahead, BI said it believes Indonesia’s IIP will remain manageable as the country strives to recover the economy from the COVID-19 pandemic, supported by the policy mix from BI, the government, and other relevant authorities.
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Translator: Agatha Olivia V, Suharto
Editor: Sri Haryati
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