The ongoing U.S. government shutdown has drawn global attention, sparking concerns about its ripple effects across emerging markets. Yet in Indonesia, the impact appears surprisingly positive. While uncertainty in the world’s largest economy continues, foreign investors have started pouring funds into Indonesia’s bond market, signaling growing confidence in the country’s economic stability.
U.S. Government Shutdown Impact on Bond Market
Fiscal tensions in Washington have prompted investors to seek alternative opportunities. Many are turning to high-yield emerging market assets such as Indonesia’s government bonds, known locally as Surat Berharga Negara (SBN). The trend underscores how the U.S. government shutdown impact can redirect global capital flows toward more stable economies.
Head of Fixed Income Analyst at PT Pemeringkat Efek Indonesia (Pefindo), Ahmad Nasrudin, explained that while the U.S. shutdown’s effects are not direct, they remain significant through shifts in sentiment and capital movement.
“The shutdown indeed creates uncertainty, but its effects are not necessarily negative for Indonesia. In a pressured global market, some investors actually seek alternatives through carry trades to emerging countries offering attractive yields like Indonesia,” he told Beritasatu.com.
Market data reflects this trend. Between October 6 and 9, 2025, foreign investors recorded a net buy of IDR 5.14 trillion in the SBN market, reversing the selling trend of the previous week. The surge indicates investor trust in Indonesia’s macroeconomic outlook, even amid global volatility.
Nasrudin also noted that the potential decline in U.S. Treasury yields has widened the spread against Indonesian bonds, creating more appeal for medium- to long-term Surat Utang Negara (SUN).
“The decline in Treasury yields narrows the spread and creates potential capital gains for SUN. Combined with a stable rupiah and controlled inflation, foreign investor interest in SBN remains high,” he explained.
Global Investor Confidence Indonesia Remains High
Indonesia’s solid fundamentals have kept investors optimistic despite uncertainty abroad. The country’s stable inflation rate, roughly 5% economic growth, and a resilient rupiah have strengthened global investor confidence.
“There is still room for yield decline if the Fed truly ends its tightening cycle. Meanwhile, Indonesia’s solid domestic conditions—such as low inflation and around 5% economic growth—will maintain the attractiveness of its bonds,” Nasrudin added.
With the 10-year SUN yield falling to 6.115% from 6.315% the week before, expectations of rate cuts from both Bank Indonesia (BI) and the Federal Reserve (Fed) continue to support market optimism. These conditions encourage investors to hold Indonesian assets for longer durations, ensuring sustained capital inflow.
Foreign Investment in Indonesia Unaffected
Despite the ongoing turmoil in the U.S., Indonesia’s investment environment remains steady. Deputy for Investment Promotion at the Ministry of Investment and Downstreaming/BKPM, Nurul Ichwan, emphasized that the U.S. shutdown has limited impact on Indonesia’s foreign direct investment (FDI) inflows.
“Actually, in terms of investment, America’s contribution is not that big. So even if there’s a shutdown, it’s relatively very short,” he said during the Indonesia International Sustainability Forum (ISF) 2025 at the Jakarta International Convention Center (JICC).
Ichwan explained that the U.S. government shutdown affects only public sector activities in America, while its private sector continues operating and pursuing investment plans abroad. “But I don’t know whether companies investing here that have their headquarters in America are affected financially by the shutdown. I don’t know about that. But so far, we have not detected any signs of impact,” he clarified.
BKPM data shows that as of the second quarter of 2025, U.S. investment in Indonesia reached US$0.8 billion, or about 6% of total foreign direct investment. This modest proportion explains why Indonesia remains resilient despite fiscal disruptions in the U.S.
Emerging Market Resilience Amid U.S. Uncertainty
Indonesia’s resilience reflects a broader trend among emerging markets that continue to attract global capital during periods of Western economic turbulence. If the Federal Reserve signals further easing, emerging economies like Indonesia could see even greater inflows. Local analysts note that Indonesia’s proactive fiscal management, inflation control, and long-term growth prospects provide investors with both stability and opportunity.
Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Anindya Novyan Bakrie, echoed similar optimism, urging local businesses to focus on strengthening export capacity instead of worrying about the U.S. political gridlock.“It’s not the first time. Apparently, from time to time, every president experiences it—it seems that’s just how their system works,” he said.
Indonesia Maintains Strong Economic Appeal
In the end, the U.S. government shutdown has indirectly benefited Indonesia by channeling more global funds into its markets. The nation’s stable fundamentals, low inflation, and sound policy direction continue to attract investors seeking consistency amid global uncertainty. As the U.S. grapples with political divisions, Indonesia stands out as a steady, appealing destination for long-term investment.
Source: beritasatu.com, investortrust.id
Image: Andy Dwibaskoro
