TEMPO.CO, Jakarta - Deputy Minister of Industry Faisol Riza revealed a trend of foreign direct investment (FDI) in Southeast Asia that increased throughout 2024. He said, "There was a 10 percent increase in investment from US$ 205 billion to US$ 225 billion," during a working meeting with the Indonesian House of Representatives Commission VII on Wednesday, July 2, 2025.
He referred to the World Investment Report 2025 released by the United Nations Conference on Trade and Development (UNCTAD). The report noted a significant increase in foreign direct investment in Indonesia, Malaysia, Singapore, Thailand, and Vietnam, driving FDI to the region to reach its highest level in the last six years.
Indonesia itself recorded a foreign direct investment flow of US$ 24 billion throughout 2024, up from US$ 21 billion in the previous year. The investment entered sectors such as mineral processing, energy, and data centers.
The FDI growth in Southeast Asia contrasts with the conditions in some other developing countries in Asia. UNCTAD noted a 3 percent decrease in the flow of foreign direct investment to the region, from US$ 622 billion in 2023 to US$ 605 billion in 2024.
Faisol said UNCTAD's findings align with the data from the Council on Foreign Relations. The institution noted that large companies from the United States and the European Union have begun shifting their production sources to Southeast Asia. "This trend indicates a sharp decline in China's share as a global production base," he said.
The Council on Foreign Relations noted that 42 percent of companies chose China as a production location in the first quarter of 2025. This figure has decreased compared to the portion in 2019, which was around 61 percent. Meanwhile, Southeast Asia experienced an increase from 14 percent in 2019 to 26 percent in 2025.
Faisol interpreted this condition as a positive signal for the relocation and diversification of production bases as the main choice in reducing dependence on a single country. "This indicates that Southeast Asia, including Indonesia, is becoming an increasingly strategic location for global investment relocation and expansion," he said.
Faisol cited the relocation of the solar panel industry from China as one of the opportunities. Since the announcement of reciprocal tariffs by US President Donald Trump, many Chinese products, including solar panels, began losing competitiveness in the export market.
This situation prompted Chinese solar panel manufacturers to relocate production to Vietnam, Indonesia, Thailand, and Malaysia. "This is reflected in the decrease in the export value of Chinese solar panels to the United States," he said.
Faisol believes that Indonesia is beginning to show great potential as an alternative location for the relocation of solar panel investments from China. This is evident from strategic partnerships between Chinese companies and local companies such as PT Lesso New Energy, Pertamina NRE, PT Trina Mas Agra Indonesia, and PT Thornova Solar Indonesia.
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