Stimulus Package Overdose

The normalization of the US monetary policy has led to an outflow of portfolio investments from most emerging markets, including Indonesia. On the other hand, the US-China trade war has a positive impact in the increased inflow of foreign direct investment to the Asian region.

KOMPAS/WISNU WIDIANTORO

President Joko Widodo hosts a luncheon with economic observers at Jakarta’s Merdeka Palace in this Aug. 31, 2015 file photograph. Several economists have urged the government to issue a stimulus package to attract investors.

There is no doubt that the normalization of the US monetary policy has led to an outflow of portfolio investments from most emerging markets, including Indonesia. On the other hand, the US-China trade war has a positive impact in the increased inflow of foreign direct investment (FDI) to the Asian region. This is because US protectionism pressures Chinese production, and Chinese China will affect US productivity.

The US and China have the largest market share of world trade. For example, the US is one of the world’s largest consumers of auto parts. Therefore, some automotive investors are increasing their investment in Thailand so it will be able to meet the demand of the US market. Investments also rose in Vietnam and Malaysia for electronic products, such as cell phones and laptops. Vietnam\'s economy grew more than 6.6 percent year-on-year (yoy).