Foreign investment, especially in term of direct investment often raises a debatable issue towards its contribution to the host countries. Nevertheless, the majority argue that foreign direct investment does not only help the developing countries in filling the resources gaps, i.e. both domestic savings and foreign exchange, but it has also a role in restructuring the developing countries’ economy via the transfer of technology and managerial skills, The latter role is appointed as the special advantage for the developing countries. In addition, the creation of employment and the promotion of exports are also seen as the other benefits.
Due to those facts, this thesis is mainly aimed to analyze the relevance issues in the Indonesian context. By using the empirical analysis, there are examined the reason for Indonesia in attracting foreign investment, the policies towards foreign and some contribution of foreign investment to the Indonesian economy. Moreover, several overview of the pattern of foreign investment are also presented in this thesis.
From some aggregate indicators, it can be inferred that, as general, foreign direct investment has played an important role in stimulating the process of economic development in Indonesia.