Indonesia's International Investment Position (IIP) recorded a net liability in the fourth quarter of 2020 of US$281.2 billion (26.5% of Gross Domestic Product / GDP), a decrease of around 16.78% when compared to the final quarter of 2019, which reached US$337.9 billion (30.2% of GDP).

This was because the position of Foreign Financial Assets (FFA) increased by around US$29.0 billion (7.7% YoY), especially other investment assets. In comparison, Foreign Financial Liabilities (FFL) decreased by US$27.8 billion (3.9% YoY) due to the low position of the portfolio investment liabilities.

However, when compared to the position of net liabilities at the end of the third quarter of 2020, which reached US$260.0 billion (24.3% of GDP), there is an increase.

"The increase in net liabilities was triggered by an increase in the FFL position that was greater than the increase in the FFA position, in line with the strengthening of foreign capital inflows," said a press release from Bank Indonesia Friday (26/3).

The position of Indonesia's FFL at the end of the fourth quarter of 2020 increased by 5.2% (QoQ) from US$651.6 billion to US$685.5 billion. The increase in the FFL position was due to a rise in the position of foreign ownership in government debt instruments and an inflow of direct investment in the form of equity.

Another factor of change was the positive revaluation of the value of domestic financial assets denominated in Rupiah, which pushed up the FFL position, in line with the Jakarta Composite Index (JCI) improvement the strengthening of the Rupiah against the US dollar.

The FFA position at the end of the fourth quarter of 2020 grew by 3.3% (QoQ) to US$404.3 billion from US$391.6 billion.

Apart from transaction factors, the FFA's rising position was influenced by a positive revaluation factor due to an increase in the average stock index of countries where assets were placed, along with the weakening of the US dollar against the majority of the world's major currencies.

"Bank Indonesia views the development of Indonesia's PII in the fourth quarter of 2020 and overall 2020 to be maintained," he added.