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Is ‘Trump Effect’ Impacting Indonesia’s Investment?

February 11, 2025

Contributor: Supriyono | Editor: Dadi Darmadi | Photo: Alief Fathan


Donald Trump’s re-election as the US President has reignited global economic discussions, resulting in the emergence of term “Trump Effect”. Many speculate that Trump's trade policies could trigger global economic instability and slow down economic growth worldwide. Hence, a critical question to ask: ‘Is the Trump Effect Impacting Investment in Indonesia?’

According to Dr. Rizky Wisnoentoro, Head of the Sustainable Finance Study Program at Ƶ (Ƶ), the geopolitics of the ‘Trump Effect’ are primarily currently centered around North and South America. As a result, he believes that Indonesia has not experienced any immediate or direct impact from Trump's policies.

“I don’t see any direct impact on Indonesia because, so far, no policies have been executed that specifically target the country. There are no tariffs or regulations that directly affect Indonesia's economy,” Dr. Wisnoentoro explained.

However, he cautioned that indirect effects could emerge, particularly in sectors related to global trade and the green economy. In this regard, new policies from the US could impact global sustainability efforts and trade regulations. Changes in environmental policies and sustainability standards might influence Indonesia’s exports and investment landscape, requiring businesses and policymakers to adapt proactively.

While Indonesia may not be directly affected by Trump's policies, Dr. Wisnoentoro warned that shifts in global trade dynamics could still have secondary consequences. He highlighted the potential risks for Indonesia’s role in the supply chain and distribution chain, especially as tensions between economic giants like the US and China continue to shape international trade. 

“The biggest concern lies in Indonesia’s position within global trade networks. If significant changes occur in the US and China’s economic strategies, Indonesia—being a part of their supply and distribution chains—must anticipate the possible consequences,” Dr. Wisnoentoro added.

Another critical factor that Dr. Wisnoentoro highlighted is the impact of US policies on global investment flows. As the US government shifts its stance on energy, the environment, and trade regulations, countries like Indonesia must work harder to maintain a steady flow of Foreign Direct Investment (FDI).

“The real challenge is ensuring that Foreign Direct Investment remains stable and continues to have a tangible impact on the Indonesian economy. We must make sure that investments coming into Indonesia truly reach and benefit local communities,” Dr. Wisnoentoro emphasized.

In sum, while the Trump Effect has sparked concerns about global economic shifts, Indonesia remains relatively insulated from its direct impacts. However, indirect effects—particularly in trade, the green economy, and FDI flows—require close attention and strategic planning. Policymakers, businesses, and investors must stay vigilant to navigate potential disruptions and capitalize on emerging opportunities in the evolving global economic landscape.