As preliminary, there were some stylist facts related to : fluctuation of FDI, the spreadment of
region as the investment recipient, and the dominancy of sectors as the investment targets. The inflow
of foreign direct investment (later is abbreviated as FDI) to Indonesia fluctuates. The sectors
composition of FDI inflows recipient from 2009 to 2018 are dominated by the industrial sector i.e.
66.93%. During 2009 to 2018, most of the FDI inflows were invested in Java by 48.71%. According to
the table above, industry emerges as a dominant sector in 3 (three) islands, namely Java, Sulawesi,
and Sumatra respectively 97.38%, 79.42%, and 68.73%. Essentially, this study attempts to portrait
the FDI (industry) flows of Sumatra Island., Sulawesi, and Java.
Based on several previous styudies showed that Minimum wages are one of the factors influencing
the FDI choice of industrial locations (Owuka, 2011). And Infrastructure was another factor that
significantly influenced FDI industry (Iskandar, 2014), Huyen (2015), William (2015), and Singh
As a start of this study description, this section relates to the literature study as stated in
CHAPTER 2, that the choices of variables and methods refers to the results of the respective
examination. In this study, researcher uses panel data of foreign direct investment (FDI) by industry
from 10 (ten) provinces of Sumatra Island, 6 (six) provinces of Java Island, and 6 (six) provinces of
Sulawesi Island from 2009 to 2018. The number of observations is 10 x 22 = 220. Analysis of the data
in this study uses regression of 22 provinces cross section panel data approach and time series of the
last 10 years (2009-2018). In this case, panel data regression will be applied to the secondary data
since it is bound by the realization of the total foreign direct investment (FDI) by industry.
There are several variables one of which is minimum wages, which is a control variable, that is
affected by the foreign direct investment (FDI) inflows. On the other hand, the electricity variable,
CPI, and dummy of Island/Islands spatial plan are variables affect significantly to the flow of FDI by
industry in Sumatra, Java, and Sulawesi. At the same time, other variables, namely roads and labor
do not significantly affect the flow of FDI by industry in the three islands.
Keywords : Investment, Industry, Infrastructure, Wage.