ABSTRACT
The Indonesian government has carried out various policies in order to increase investment in Indonesia. One of the policies carried out by the government is spending on sectors that can attract investor interest. This study aims to determine the effect given by the spending of Ministries/Agencies on economic function in the transportation sector; agriculture, forestry, fisheries, and marine sector; and the watering sector towards investment in Indonesia for the period 2005 to 2017. The analytical method used is regression analysis with a cointegrated Autoregressive Distributed Lag approach. In the long term, partially, Ministries/Agencies spending in the transportation sector has a positive effect on Foreign Direct Investment and Domestic Investment, while Ministries/Agencies spending in the agriculture, forestry, fisheries, and marine sectors, partially, has a positive effect only on Foreign Direct Investment. The results showed that Ministries/Agencies spending in the three sectors, simultaneously, had a positive effect on Foreign Direct Investment and Domestic Investment. So, the policy implication that can be implemented is to increase Ministries/Agencies spending allocations in the three sectors in order to increase investment, both Foreign Direct Investment and Domestic Investment in Indonesia.
