Joe Biden Presidency Raises Indonesia’s Foreign Investment Outlook

JAKARTA, KOMPAS.com – Joe Biden's win as the 46th US President is expected to restore the global and Indonesian economies.

A Joe Biden presidency increases the likelihood of generating more foreign investment in Indonesia.

The country could also stand to benefit from higher commodity prices on goods it commonly exports.

“I believe Indonesia will experience a positive effect on the global economic recovery following Biden’s victory. Investment flow will also make its way into Indonesia via portfolio investment or foreign direct investment,” said Piter Abdullah Redjalan, Research Director of CORE Indonesia.

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The forecast of foreign investment in Indonesia is promising as a Joe Biden presidency would end the US-China trade war that has affected the global economy.

The outlook brings a positive sentiment for international trade and market which results in production and higher commodity prices.

This optimistic forecast will trickle into the financial market by enhancing the risk appetite, thus boosting the stock market index and trade volume.

“In the medium term, I predict that Biden will have a positive impact on the global investment climate.”

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Piter added that the US Democratic Party which endorsed Joe Biden is known for its strict tax policies in comparison to the US Republican Party that often gives tax cuts.

However, in practice, the tax cuts promised by US Republicans benefit a small group namely the wealthiest individuals. As such, the result of the tax cuts has done little for the US economy.

“The Democrats typically increase taxes which I predict will not have much of an effect on the US economy because of the other positive benefits.”

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Financial Market Analyst Lukman Leong concurred with the positive sentiment of a Joe Biden presidency on the financial market both in the short and long term.

He projects that the stock market will not weaken in the immediate future given that the expected stimulus post-Biden victory will weaken the US dollar.

“But in the future, a stock market recovery will depend on the Covid-19 mitigation efforts.”

(Writer: Fika Nurul Ulya | Editor: Bambang P. Jatmiko)

Source: https://money.kompas.com/read/2020/11/08/150300126/kemenangan-biden-diproyeksi-deraskan-aliran-modal-asing-ke-ri