Russia's Invasion of Ukraine May Curb Foreign Investment in Indonesia: Indef

TEMPO.CO, Jakarta - Institute for Development of Economics and Finance (Indef) predicted that Russia's invasion of Ukraine would affect various economic activities in Indonesia. Indef Director Tauhid Ahmad said the conflict would disrupt the realization of foreign investment in Indonesia.

“There are 88 investment projects of Ukraine in Indonesia worth US$1.6 million. The situation in Ukraine will definitely affect the capital realization in Indonesia,” said Tauhid to Tempo on Friday, Feb. 25.

The condition would also put pressure on the archipelago which is striving to boost its investment realization albeit both countries are non-traditional investment partners for Indonesia. In 2022, Indonesia targeted investment realization both from foreign and domestic capital to reach Rp2,000 trillion.

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

“Even though our trade balance with Ukraine is in deficit, it will be difficult because we will face difficulties to get goods from Ukraine. But there won’t be too many effects with Russia,” said Tauhid.

From 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 that is inflation,” Taufik remarked.

Read: Indonesian Crude Oil Prices Surge amidst Russia, Ukraine Conflict 

FRANCISCA CHRISTY ROSANA