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All Journal PROCEEDINGS OF THE INTERNATIONAL CONFERENCE ON DATA SCIENCE AND OFFICIAL STATISTICS
Sofiana, Apriani
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Computer Science & IT

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The Impact of the Job Creation Law and Other Variables on Indonesia's FDI from 2018 to 2024 Sofiana, Apriani; Sohibien, Gama Putra Danu
Proceedings of The International Conference on Data Science and Official Statistics Vol. 2025 No. 1 (2025): Proceedings of 2025 International Conference on Data Science and Official St
Publisher : Politeknik Statistika STIS

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.34123/icdsos.v2025i1.555

Abstract

Although national Foreign Direct Investment (FDI) realization in Indonesia increased following the enactment of the Job Creation Law in 2021, regional FDI realization actually showed a decline in 17 of Indonesia's 34 provinces. Reviews from international organizations such as the World Bank and the World Trade Organization (WTO) suggest the need for analysis to examine the influence of investment-supporting variables on FDI in Indonesia, including the Job Creation Law policy. Therefore, the objective of this study is to analyze the variables influencing regional FDI realization in 34 provinces for the 2018-2024 period. The method used is panel data regression with the selected Random Effect Model (REM). The results show that the Household Consumption Expenditure (HCE) as a proxy for market size, non-oil and gas exports as a proxy for openness of market access, the mining sector's GRDP as a proxy for natural resource potential, and the Job Creation Law have a positive effect on regional FDI realization. These results align with eclectic dunning theory. Disparities in FDI realization were also found, regions outside Java Island that experienced high FDI realization were partly due to internal factors such as abundant natural resources, the presence of industrial areas, and product diversification.
Co-Authors Sohibien, Gama Putra Danu