Abstract:
This study aims to investigate the competitive advantage in Foreign Direct Investment
(FDI) inflows between Indonesia and Singapore by analyzing critical elements that
shape their investment climates. Utilizing competitive advantage theory as the
analytical framework, the research focuses on Porter Diamond Model determinants
factors: factor conditions, demand conditions, related and supporting industries, and
firm strategy, structure, and rivalry. Using a qualitative method, these determinants are
further examined through eight variables to identify strengths and weaknesses in each
country’s approach to attracting FDI. The findings reveal that Singapore demonstrates
superior performance in six variables out of eight. In contrast, Indonesia performs
better in two variables out of eight. Despite its strengths, Indonesia faces challenges in
infrastructure and regulatory efficiency, which diminish its overall appeal to investors
compared to Singapore. The study underscores the critical importance of targeted
policy reforms in Indonesia to address these gaps, enhance its investment climate, and
maximize the economic benefits of FDI. These insights provide valuable guidance for
both nations in formulating strategies to sustain and improve their competitive
positions in the global FDI landscape.
