Net Liabilities of Indonesia’s International Investment Position Increased in the Q3/2021

No.23/335/DKom

Indonesia's International Investment Position (IIP) recorded a higher net liability at the end of Q3/2021. Indonesia's IIP at the end of Q3/2021 recorded a net liability of USD275,9 billion (24.1% of GDP), up from USD264.7 billion (23.9% of GDP) at the end of Q2/2021. The increase stemmed from a larger increment in the position of Foreign Financial Liabilities (FFL) than Foreign Financial Assets (FFA).
The higher Indonesia FFL position was supported by improving corporate performance in line with solid exports and continued of foreign capital inflows into domestic financial markets. Indonesia's FFL position climbed 4.1% (qtq) from USD680.2 billion at the end of Q2/2021 to USD707.8 billion at the end of Q3/2021. The rising FFL was primarily attributable to the positive revaluation factors on domestic financial instruments given the higher stock prices of several domestic companies, in line with strong exports and Rupiah appreciation against the US dollar. A further incline in the FFL position edged up by an increase of foreign capital inflows in direct investment, portfolio investment, and other investments in line with the positive perception of investors concerning the promising domestic economic outlook.
Indonesia's FFA position rose, driven by the increase in all components of the FFA. The FFA position at the end of Q3/2021 grew 4.0% (qtq) from USD415,4 billion to USD431.9 billion at the end of Q2/2021. All components experienced increased FFA primarily in reserve assets and other investments in line with additional SDR allocations, increased deposit placements, and private sector receivables. The revaluation factors offset further FFA gains due to broad US dollar appreciation against major global currencies, together with higher Government bond yields in several asset placement countries.
Bank Indonesia views that Indonesia's IIP at the end of Q3/2021 remained solid and supported external resilience. This condition is indicated by Indonesia's IIP liability structure dominated by long-term maturity instruments (93.6%). Going forward, Bank Indonesia believes that Indonesia's IIP performance will be maintained in line with the effort to stimulate economic recovery from the Covid-19 pandemic, supported by the synergy of Bank Indonesia's policy mix and government policies, as well as policies of other relevant authorities. Nevertheless, Bank Indonesia will continue to observe the potential risk of IIP net liabilities to the economy.

Further information is presented in the Q3/2021 Indonesia's IIP Report on the Bank Indonesia website.

Jakarta, 21^st December 2021
Head of Communication Department
Erwin Haryono
Executive Director