The Dominant Factors Influencing the Flow of Foreign Direct Investment to Indonesia

Abstract

This paper aims to examine the impact the gross domestic product of the exporting country and the importing country, total tax rate to a commercial profit of exporting country, and importing. As for as, the object of research is the flow of FDI from four countries, namely the Netherlands, Malaysia, Singapore, and Japan to Indonesia. While the methodology used a gravity model specification to model bilateral FDI outflows. Our study finds most real GDP for both the exporting and importing country have consistently positive signs as expected, although generally, only the coefficient of the GDP of the importing country is significant. The coefficient percentage of the total tax rate to commercial profit, both in the exporting country and importing country, also in line with the theory, although both are insignificant.