Wednesday, 20 October 2021 | 15:13 WIB

Indonesia Net International Investment Position Liabilities Plunge in Q1

Illustration: JCI.

JAKARTA, NNC - Indonesia's net international investment position (NIIP) recorded net liabilities that decreased primarily due to reduced net foreign liabilities (NFL) position.

At the end of the first quarter of 2018, Indonesian NIIP recorded net liabilities of $327.9 billion (31.8 percent to GDP), lower than the net liabilities at the end of fourth quarter of 2017 which amounted to $333.6 billion (32.9 percent to GDP).

Bank Indonesia noted that Indonesia's lower NFL position was driven by a decrease in portfolio investment and direct investment liabilities at the end of first quarter of 2018. The NFL position in the period dipped 0.6 percent (qtq) or by $4.0 billion to $667.2 billion affected primarily by the decline in the value of rupiah-denominated investment instruments.

Official information from the Ministry of Communications at BI revealed that the decline in the value of investment instruments is in line with the decline in the Jakarta Composite Index (JCI) in the first quarter of 2018.

"In addition, the declining NFL position is also influenced by the strengthening of the US dollar against the rupiah," he said.

He also explained that the decline in NIIP liabilities is also influenced by the rise in Indonesia's Net Foreign Assets (NFA) position. The NFA position at the end of the first quarter of 2018 rose 0.5 percent (qtq) or by $1.7 billion to $339.3 billion, boosted by NFA earned transactions in the form of direct investment, portfolio investment and other investments.

In addition, the rise in NFA position at the end of the reporting period is affected by other change factors such as a positive revaluation of NFA in non-US dollar denomination in line with the US dollar weakening against certain currencies.

Bank Indonesia considers the development of NIIP of Indonesia in the first quarter of 2018 still healthy. Nevertheless, Bank Indonesia remains wary of the risk of NIIP liabilities to the economy.