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All Journal Indonesian Journal of Law, Governance, and Regulation
Muhammad Dimas Aditya Heru
Faculty of Law, Universitas Lampung Indonesia

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Regulating Foreign Direct Investment (FDI) in Indonesia: An opinion paper on legal certainty, developmental selectivity, and sustainable openness  Muhammad Dimas Aditya Heru
Indonesian Journal of Law, Governance, and Regulation Vol. 1 No. 1 (2026): February 2026
Publisher : Privietlab

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.55942/ijlgr.v1i1.1902

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.
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