This study investigates the determinants of FDI inflow in the aggregate and sectors in 33 provinces in Indonesia during the 2010-2018 period. Based on Panel Corrected Standard Errors (PCSE) estimator, this study shows that each sector has specific determinants. Furthermore, we found that seven determinant factors are indispensable in attracting FDI in aggregate in Indonesian provinces: cumulative FDI aggregate, agglomeration neighboring province (GAD), domestic investment, urbanization, human capital (lower secondary school), bank lending, and foreign trade. In addition, we found that human capital (lower secondary school) and unit labor cost are essential variables in luring FDI in the agricultural sector. Whereas for the manufacturing sector, the leading factors in attracting foreign firms are GAD, foreign trade, and industrial estates. Finally, the critical factors for attracting foreign enterprises in the hotel and restaurant sectors are urbanization, human capital (upper secondary school), and GDP per capita.
Al Muizzuddin FAZAALLOH (Tue,) studied this question.