<![CDATA[This study examines the relationship between geopolitical risk arising from the United States–Iran conflict and Foreign Direct Investment (FDI) trends in Indonesia during the period 2012–2022. Using a descriptive-quantitative approach that combines secondary data trend analysis, event study, and systematic literature review, this research integrates the Geopolitical Risk Index (GPR) from Caldara and Iacoviello (2022) along with Indonesian macroeconomic indicators, including GDP growth, inflation, and the Rupiah exchange rate. The results indicate that every significant US–Iran conflict escalation empirically associates with a slowdown in FDI inflows to Indonesia. The sharpest short-term impact was observed during the assassination of General Qasem Soleimani in January 2020, which triggered a 5.3% decline in the Jakarta Composite Index and simultaneous Rupiah depreciation. This relationship operates through five main transmission mechanisms: investor sentiment, oil price volatility, exchange rate depreciation, global financial transmission, and multinational supply chain reorientation. Domestic macroeconomic variables, particularly consistent GDP growth and exchange rate stability, serve as crucial contextual factors that mitigate negative geopolitical fluctuations. This study concludes that Indonesia occupies the position of a non-belligerent affected economy—a country not directly involved in the conflict but vulnerable to its economic consequences through global energy and financial channels]]>
