Main Article Content



This study aims to examine the factors that influence the inflow of Foreign Direct Investment (FDI) in Indonesia. The data in this study are panel data that combines time series data and cross sectional data. Time series data covers the period 1990 to 2018, while cross sectional data covers partner countries that hold tax treaty with Indonesia. The research hypothesis was tested with panel data regression. Based on the results of the analysis, it is obtained evidence that the Tax Treaty (Perjanjian Penghindaran Pajak Berganda/P3B) variable has different effects based on its age range. Tax treaty which has a short-term age range has no effect on FDI inflow, medium age range has a negative effect, and a long-term range  has a positive effect. Therefore the government can maximize the flow of FDI from countries that have a long-term tax treaty life span. Openness in trade in partner countries also has a positive effect on FDI inflows in Indonesia (FDI). The higher level of trade openness with partner countries, means the lower trade barriers in the country. Whereas the ratio of GDP per capita of partner countries to Indonesia and the exchange rates of partner countries to USD negatively affect FDI inflows.


Tax Treaty Foreign Direct Investment Gross Domestic Product

Article Details

Author Biography

Agung Yuniarto, Politeknik Keuangan Negara STAN

Academic profile: n/a

How to Cite
Yuniarto, A. (2020). Analysis of Factors Affecting Foreign Direct Investment (FDI) Inflows in Indonesia. Jurnal Analisis Bisnis Ekonomi, 18(1), 61-69.


  1. Asongu, S. A. (2013). How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa. African Development Review, 25(1), 14–29.
  2. Aziz, A., & Makkawi, B. (2012). Relationship between Foreign Direct Investment and Country Population. International Journal of Business and Management, 7(8), 63–70.
  3. Bhasin, N., & Manocha, R. (2016). Do Bilateral Investment Treaties Promote FDI Inflows? Evidence from India. Vikalpa, 41(4), 275–287.
  4. Braun, J., & Zagler, M. (2014). An Economic Perspective on Double Tax Treaties with ( in ) Developing Countries. World Tax Journal, October.
  5. Chakrabarti, A. (2001). The determinants of foreign direct investment: Sensitivity analyses of cross-country regressions. Kyklos, 54(1), 89–114.
  6. Changwatchai, P. (2010). The Determinants of FDI Inflows by Industry to ASEAN. 96–175.
  7. Dumairy. (2006). Perekonomian Indonesia. Erlangga.
  8. Fachrulloh, N. E., & Mawardi, M. K. (2018). Analisis Determinan Foreign Direct Investment Di Negara Emerging Market Asia Periode 2011-2015. Jurnal Administrasi Bisnis (JAB), 57(2).
  9. Lily, J., Kogid, M., Mulok, D., Thien Sang, L., & Asid, R. (2014). Exchange Rate Movement and Foreign Direct Investment in Asean Economies. Economics Research International, 2014, 1–10.
  10. Naveed, A., & Shabbir, G. (2006). Trade Openness, FDI, and Economic Growth: A Panel Study. Pakistan Economic and Social Review, XLIV(1), 137–154.
  11. Nurhidayat, R. (2012). Tax Treaty dan Foreign Direct Investment di Indonesia. Finance and Banking Journal, 14(1), 44–59.
  12. Ohno, T. (2010). Empirical Analysis of International Tax Treaties and Foreign Direct Investment∗. Public Policy Review, 6(2), 287–311.
  13. Organisation for Economic Co-operation and Development. (2008). Policy Brief: Tax Effects on Foreign Direct Investment (Issue February).
  14. Stein, E., & Daude, C. (2007). Longitude matters: Time zones and the location of foreign direct investment. Journal of International Economics, 71(1), 96–112.
  15. Tosompark, C. T., & Daly, K. (2012). The Determinants of FDI Inflows – Recent Evidence from Thailand. SSRN Electronic Journal, 1–7.
  16. Vijayakumar, N., Sridharan, P., & Rao, K. C. S. (2010). Determinants of FDI in BRICS Countries: A panel analysis. Int. Journal of Business Science and Applied Management, 5(3), 1–13.