Australia's Investment in Southeast Asia Plummets Amid Market Challenges

Australia's investment in Southeast Asia has been declining since 2022, falling to $104 billion. This is less than half of what Australia invests in New Zealand and a significant drop from previous years.

The Albanese government has committed to strengthening Australia's relationship with Southeast Asia by boosting trade and investment ties. The strategy 'Invested: Australia's Southeast Asia Economic Strategy to 2040' was launched in 2023, but its recommendations are yet to bear fruit.

One of the main challenges facing Australian investors is Indonesia, where a population of over 300 million and projected economic growth make it an attractive market. However, unpredictable regulatory and legal regimes, corruption, and limited investor knowledge have made it difficult for foreign investors to enter the market.

The Indonesian rupiah has sunk 11% against the US dollar since President Prabowo Subianto's inauguration, further deterring investors. The Australian government can help by providing funding and practical support for early-stage project preparation and advisory work to grow the pipeline of bankable projects in the region.