Ricky Fernando

Foreign Direct Investment in Indonesia: Has It Gone to the Right Sector? Ricky Fernando

In this globalization era, Foreign Direct Investment (FDI) has become an important part of economy. Countries are competing to attract more FDI since it could make significant contributions to economic development such as increasing productive capacity and increasing aggregate demand which increases output and employment. In addition, large inflow of FDI means that there will be large inflow of capital and technological transferred. However, there is one question left regarding this inflow of FDI: does it go to the right sector? Generally speaking, the sectors for investment are divided into three which are primary (agriculture, forestry, fishery, mining, etc), secondary (manufacturing industry), and tertiary (transportation, services, construction, etc). The FDI coming to a country goes to several sectors and it is definitely not equally distributed. The question is which sectors should be given more attention so that they can attract more FDI and bring more benefit to the country as a whole?