Investment from Malaysia has increased drastically in the last five years, both in terms of the number of projects. Data from the Investment Coordinating Board (BKPM) shows that the realization of Foreign Investment (PMA) in 2024 reached IDR 900.2 trillion or equivalent to 52.5% of the total investment last year (IDR 1,714.2 trillion). Of the five countries with the largest PMA realization, Malaysia stole the attention with a significant spike compared to previous years. However, which sector received the most funds?
Data from the Ministry of Investment of the Investment Coordinating Board (BKPM) shows that Singapore still leads as the largest investor with an investment value of US$ 20.1 billion, followed by Hong Kong US$ 8.2 billion, China, Malaysia, and the United States. These five countries control the majority of foreign capital flows entering Indonesia throughout the year.
Sectorally, investment from these countries mostly flows into the basic metal industry, metal goods, not machinery and equipment, followed by the paper and printing industry, mining, food industry, and other services. This trend shows that downstreaming is still a favorite for global investors, along with government policies that encourage added value domestically.
Malaysia has experienced extraordinary investment growth in the past five years. In 2020, Malaysia’s investment realization in Indonesia was still at US$ 1.045 billion, then skyrocketed to US$ 1.36 billion in 2021, then doubled to US$ 3.3 billion in 2022. This trend continued to climb in 2023 with US$ 4.1 billion and reached US$ 4.2 billion in 2024. If using the 2024 APBN exchange rate as used by BKPM (US$ 1 = IDR 15,000), Malaysia’s investment in 2024 reached IDR 63 trillion. This figure is the highest ever recorded by BKPM. When compared to 2020 or five years ago, Malaysian investment in Indonesia jumped 302%.
In terms of the number of projects, Malaysia has also experienced a significant increase. If in 2020 the number of projects worked on was only 3,283 projects, in 2024 it will reach 6,554 projects. This means that in addition to increasing investment value, project distribution is also wider and involves more sectors. Malaysia focuses on the basic metal, mining, and paper and printing industries. This is in line with the needs of the industry in Malaysia which requires a stronger supply of raw materials and production infrastructure.
Malaysia has proven its commitment as one of the largest investors in Indonesia, with consistent growth in the past five years. With an investment value of US$ 4.2 billion and more than 6,500 projects in 2024, Malaysia’s presence is increasingly felt in various industrial sectors. The challenge now lies in Indonesia’s hands: how to maximize this capital flow so that it not only benefits investors but also encourages sustainable and highly competitive economic growth.
January 31, 2025, CNBC Indonesia
(https://www.cnbcindonesia.com/research/20250131121307-128-606953/malaysia-jadikan-ri-surga-investasi-guyuran-modal-tembus-rekor)