An Indonesian Perspective: A Deeper Look

Earlier this week, I had the pleasure of meeting Dr. Sandiaga S. Uno and my key take-away was as follows: Australians know Indonesia better than almost any other foreign market, and own less of it than almost any other foreign investor.

This time I went past the press releases of BKPM (Badan Koordinasi Penanaman Modal, translated as the Investment Coordinating Board) into its quarterly datasets, which is where Australia shows up: eighth, US$0.72bn in 2025, one twenty-fifth of China.

Here are four running hypotheses on why Australia has not become a major investor in a country that, at its closest, is only 500 km from Australian shores (China's closest point, Hainan to the Natuna Islands, is 1,600 km):

1. Too risky. Weakest of the four. Everyone ranked above us prices the same governance risk and invests anyway.
2. Wrong kind of capital. Australian outbound money sits in super funds and listed companies benchmarked to developed markets. The Future Fund has no country mandate. The one instrument built for the region, the A$2bn Southeast Asia Investment Financing Facility, is mostly a lender and guarantor spread across ten countries, and it is smaller than what Malaysia alone put into Indonesia last year.
3. Wrong kind of familiarity. We know Bali, not the boardroom. Hotels and restaurants is Australia's highest rank in any sector, second, and three quarters of that money is in Bali.
4. Wrong operating model. The strongest. Every foreign investor of scale arrives through an operator already on the ground. China through private smelter operators in joint ventures with Indonesian licence-holders. Japan through fifty-year-old vehicle joint ventures. Malaysia through listed companies its pension funds control.

The five largest investors each lead at least one sector outright. Australia leads none.

The charts below are computed from BKPM's own quarterly datasets, which reconcile exactly to its published totals. Sector by sector, who is in it, and where Australia sits.