New Challenges in Accounting and Finance

This research aimed to know how the effect of capital expenditure and inflation variable the Domestic and Foreign Investment in Indonesia especially Provinces on Java Island from 2016 to 2020. This research used the panel data regression method with time‐series data from the Central Bureau of Statistics (BPS) and the Directorate General of Fiscal Balance's portal data. The results of this study are the inflation variable partially significant effect on Foreign Investment in provinces on Java Island. On the contrary, the capital expenditure variable does not have a significant effect both on domestic and foreign investment, while the inflation variable strengthens the relationship between capital expenditures and domestic investment.