Regulating Foreign Direct Investment (FDI) in Indonesia: An opinion paper on legal certainty, developmental selectivity, and sustainable openness

Muhammad Dimas Aditya Heru ()
Additional contact information
Muhammad Dimas Aditya Heru: Faculty of Law, Universitas Lampung Indonesia

Indonesian Journal of Law, Governance, and Regulation, 2026, vol. 1, issue 1, 48-61

Abstract: Indonesia has spent more than two decades trying to reconcile two pressures that pull investment law in different directions: the need to attract long-term Foreign Direct Investment (FDI) and the constitutional responsibility to govern natural resources, labor, land, public services, and local enterprise in the public interest. This opinion paper argues that Indonesia should not treat liberalization as the main measure of investment-law success. A more defensible model is sustainable openness: a regime that is open enough to reduce unnecessary entry barriers, but sufficiently disciplined to preserve democratic regulatory space, environmental safeguards, domestic capability building, and fair treatment for investors. The paper reviews the contemporary legal architecture of Indonesian FDI regulation, including Law Number 25 of 2007 on Investment, the Job Creation framework consolidated through Law Number 6 of 2023, the positive investment-list system, risk-based licensing through Government Regulation Number 28 of 2025, and the 2025 ministerial OSS implementing rules. It then develops a normative position on legal certainty, sectoral selectivity, licensing, investor protection, and treaty policy. The central recommendation is that Indonesia should move from formal deregulation toward transparent, reviewable, and development-oriented regulation. Legal certainty is not the absence of regulation; it is the existence of clear rules, accountable administration, credible dispute settlement, and predictable safeguards.

Keywords: foreign direct investment; investment law; Indonesia; OSS; positive investment list; legal certainty; sustainable development (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journal.privietlab.org/download.php?id=12547 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prv:ijlgrp:1902

Ordering information: This journal article can be ordered from
https://journal.priv ... GR/article/view/1902

DOI: 10.55942/ijlgr.v1i1.1902

Access Statistics for this article

More articles in Indonesian Journal of Law, Governance, and Regulation from Privietlab Research Center
Bibliographic data for series maintained by Mochammad Fahlevi ().