JAKARTA, The Shiro Corp - The government once again raised the national investment target with great ambitions.
In 2026, investment is set to reach Rp 2,175 trillion, an increase of 14.2 percent from the 2025 target of Rp 1,905.6 trillion.
This number is not just a projection, but also a serious bet on whether Indonesia can maintain its growth momentum amidst increasingly complex global challenges and unresolved internal issues.
The government through the Ministry of Finance (Kemenkeu) acknowledged that the risks from abroad have been lurking since the beginning.
Trade wars against a geopolitical backdrop, global economic slowdowns, and tensions in several regions have the potential to disrupt the flow of incoming capital.
Not to mention the fluctuation of commodity prices and the competition for global supply chains, which put Indonesia in a difficult position to compete in attracting foreign direct investment (FDI).
"In 2026, in an effort to promote investment and national downstreaming, Indonesia still faces significant challenges, both from external and internal aspects. External challenges are influenced by various global risks such as geopolitical-based trade wars, global economic slowdown, and tensions in several parts of the world," stated the 2026 Fiscal Note, quoted on Monday (18/8/2025).
Within the country, the classic issue of structural inefficiency remains a stumbling block.
Indonesia's Incremental Capital Output Ratio (ICOR) ranging from 6 to 6.3 in 2023 indicates that the capital invested is not yet efficient enough when compared to other countries.
The signal for improving investment climate is still halfway.
The Business Ready (B-Ready) Survey 2024 placed Indonesia with an aggregate score of 63 out of 100, ranking 20th out of 50 countries. This achievement sends a clear message that regulatory reforms and administrative improvements can no longer be delayed.
"Improvement of the investment climate and structural reforms are still needed to enhance Indonesia's competitiveness at the global level," continued the 2026 Financial Statement.
Nevertheless, the achievements of the past five years have provided a sense of confidence. Investment realizations increased sharply from Rp 826.3 trillion in 2020 to Rp 1,714.2 trillion in 2024, with an annual growth rate of 20.82 percent in the last year.
Basic metal industry remains the driving force, in line with the downstream strategy.
The surge in investment also directly impacted job creation.
The absorbed workforce surged from 1.15 million people in 2020 to more than 2.45 million people in 2024.
Investment distribution is also beginning to shift. The share outside Java reached 51.9 percent or Rp 3,148.2 trillion, slightly above Java which accounts for 48.1 percent or Rp 2,919.4 trillion.
It means that the strategy of balanced development through regional investment acceleration is beginning to show results.
The upstream sector has become more solid with a realization of Rp 783.2 trillion or 12.91 percent of the total investment in the last five years, especially in oil and gas, minerals, plantations, as well as fisheries and marine.
However, the 2026 target is not just about numbers. The question is, whether the strategy of downstreaming and industrialization can generate sustainable added value within the country, or whether it will be trapped in a raw material extraction model wrapped in the jargon of downstreaming.
The government stated that it will expand downstream processing in strategic sectors, improve the OSS licensing system, strengthen foreign investment promotion, and promote deregulation.
However, the effectiveness of this step will be tested on the ground, especially regarding legal certainty, labor quality, and infrastructure readiness.
Ambition to reach Indonesia Emas 2045 through the 5th Asta Cita, continuing the downstream and industrialization, requires policy consistency that goes beyond annual programs.
If structural reforms are slow, the investment target of Rp 2.175 trillion can be achieved on paper, but its impact on competitiveness and public welfare will be minimal.
Here lies the government's biggest homework, which is to make investment not just a number in trillions, but a real instrument to get out of the middle-income trap.
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