Russia’s invasion of Ukraine could curb foreign investment in Indonesia

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TEMPO.CO, JakartaThe Institute for Economic and Financial Development (Indef) has predicted that Russia’s invasion of Ukraine will affect various economic activities in Indonesia. Indef director Tauhid Ahmad said the conflict would disrupt foreign investment in Indonesia.

“There are 88 investment projects from Ukraine in Indonesia worth 1.6 million dollars. The situation in Ukraine will definitely affect capital realization in Indonesia,” Tauhid told Tempo Friday, February 25.

The condition would also put pressure on the archipelago which is trying to boost its investment realization, despite the two countries being non-traditional investment partners for Indonesia. In 2022, Indonesia has targeted making investments of both foreign and domestic capital to reach 2 trillion rupees.

Apart from investment, the geopolitical conflict would also disturb the trade balance. Tauhid said that in 2021, Indonesia’s exports to Ukraine reached $416 million, while the total import value was $1.040 billion.

“Even if our trade balance with Ukraine is in deficit, it will be difficult because we will have difficulty getting goods from Ukraine. But there will not be too many effects with Russia,” Tauhid said.

Of these various economic impacts, Tauhid said the effect of the war between Russia and Ukraine in the medium term will be Indonesia’s inflation rate. “The effect of all of this is inflation,” Taufik noted.

Read: Indonesian crude oil prices rise amid Russia-Ukraine dispute

FRANCISCA CHRISTY ROSANA

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