In the session held on Tuesday, 3 September, experts highlighted the importance of smart investment strategies in facing current global challenges and ensuring optimal investment returns, particularly amid the ongoing global crisis.

An increasing number of countries in the Global South are actively participating in global capital flows by implementing investment strategies, demonstrating significant growth in foreign direct investment. This means that outbound and inbound are becoming more innovative. Although global Foreign Direct Investment (FDI) fell by 2 percent to US$1.3 trillion last year, some regions, such as Southeast Asia, saw an increase in foreign investment.

This was stated by the Investment Promotion Director for East Asia, Central Asia, South Asia, the Middle East, and Africa at the Ministry of Investment/Investment Coordinating Board (BKPM), Cahyo Purnomo, while attending the discussion.

"In Southeast Asia, FDI climbed by 1.3 percent, reaching US$226 billion. This is an encouraging sign that, despite the region’s political and economic challenges, ASEAN remains an appealing and potentially higher-growth investment destination," he said.

According to the World Investment Report 2022, developed countries dominate FDI revenues with a total of around US$1 trillion, while developing and least-developed countries receive only around US$400 million. This distribution indicates a significant disparity in FDI flows, where most investments remain concentrated in developed countries and only 23 percent flow to the Asia-Pacific region.

Furthermore, a trend shows that investments from developing countries are more likely to flow back to strong countries in the Global South or developed countries in the North, hence widening the investment gap between the South and the North. Factors such as demographic quality, limited infrastructure, and lack of support for foreign investment often become major impediments for developing countries to attract investments.

This session also underlined the need for changes in investment patterns to make them more inclusive and easily accessible to all countries while maintaining optimal returns and resilience against global economic fluctuations. Countries in the Southern region is also encouraged to create a more conducive domestic environment to increase foreign investment flows.

"It is important for us to continue promoting strategies that can optimize investment returns amidst global economic uncertainty. Through proper policies and adequate infrastructure support, countries in the Global South can enhance their competitiveness in attracting larger foreign investments," added Cahyo.

The discussion also revealed that developing countries need to adapt to dynamic global investment trends and ensure that their outbound-inbound strategies can support sustainable economic growth. This forum also becomes a crucial platform for developing countries to share experiences and learn from best practices in attracting and managing foreign investments. (Bappenas/TR/Elvira Inda Sari/SW/SC).

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For more information, please contact:

Head of the Public Relations, Archives, and Executive Administration Bureau at the Ministry of National Development Planning (PPN/Bappenas), Ardian Budhi Nugroho (082124150454).