Foreign direct investment in Indonesia rose 7.3% in the second quarter, suggesting improved confidence in Southeast Asia's largest economy following peaceful legislative elections in April.
According to government data, Indonesia drew an additional $7.4 billion (85.2 trillion rupiah) between April and June compared to the three months prior. FDI year-on-year was up 2.8%.
The legislative elections came months before presidential elections on July 9 and were seen to set the stage for a win by Jakarta Gov. Joko Widodo, whose party won the most seats in April's poll.
Mr. Widodo's ability to push through projects as a mayor in a Solo, Central Java, and his efforts as Jakarta governor were well received by investors.
Later on, officials from the elections commission declared Mr. Widodo the winner of the presidential election, something economists say will further boost investor sentiment.
“A peaceful conclusion of the electoral cycle in Indonesia, with the confirmation of a smooth handover, will end months of political uncertainty, and should be favorable for investment,” Fitch Ratings Agency said Thursday.
Inflows of foreign direct investment to the country slid 1% in the first quarter of 2014 to $6.9 billion from the same period a year earlier, with investors such as Volkswagen AG holding off plans to invest due to potential political risks tied to the elections.
“The new government may bring new hope, enthusiasm and energy, which can create momentum and new opportunities in the future,” Mahendra Siregar, the chairman of Indonesia's investment board said.