Track: Business Management

Abstract

ASEAN has been one of the world’s largest markets for the automotive industry, among which Indonesia is the largest domestic market of automotive sales. ASEAN countries have implemented newer foreign trade policies and it affects the increase in industrial competition. So does Indonesia’s automotive industry. This research aims to explain the importance of Foreign Direct Investment (FDI) and its effects on the ASEAN automotive industry competition that benefits the Indonesian economy. Neo-classical economic theory was reviewed to observe FDI. The method applies a qualitative-quantitative approach, i.e.  SWOT (Strength, Weakness, Opportunity & Threats). The result of the analysis shows that the current FDI policy impacts the increase of Foreign Trade Agreements to expand domestic production. In conclusion, Indonesian Automotive Industry would develop with the support of relevant FDI.