On October 2, 2024, the Indonesian Ministry of Foreign Affairs hosted a national conference titled “Navigating International Law Challenges of the 21st Century: Indonesia’s Perspectives”, aimed at addressing the complexities of international law, both public and private. As globalization continues to reshape the landscape of international relations, the conference sought to explore how Indonesia can effectively navigate the dynamic and ever-evolving framework of international law. With the increasing importance of legal frameworks in attracting foreign investment, the discussions centered on critical issues that underpin Indonesia’s engagement with international legal standards.
During the 3rd panel discussion, Ahmad Fikri Assegaf, Co-Founder of Assegaf Hamzah and Partners, posed a crucial question: why do foreign companies and investors often prefer jurisdictions like Singapore or Hong Kong over Indonesia for arbitration and other alternative dispute resolution (ADR) mechanisms? This question underscores a significant concern that has persisted for years: the perception that Indonesian laws may be less favorable or reliable in international contexts. The preference for external arbitration venues raises alarms about Indonesia’s competitiveness in attracting foreign investment and its overall standing in the global legal landscape.
The entire conference was essentially a response to Assegaf’s question. It highlighted Indonesia’s reluctance to fully adopt international laws, which is often justified on the grounds of national interest. However, this reluctance can be traced back to a lack of political will to adapt to the fast-changing dynamics of international law. There are further complexities involving capacity issues within Indonesian ministries, bureaus, and agencies, as well as among legal practitioners—from prosecutors to advocates. This capacity gap presents a formidable barrier to the implementation of more internationally aligned legal practices, ultimately affecting Indonesia’s ability to foster a more inviting environment for foreign investors.
To address these challenges, a fundamental shift in mindset is essential. The responsible ministries and agencies must exhibit the political will to align Indonesia’s legal framework with international standards. This entails not only adapting current laws but also critically reassessing the origins of existing legislation, much of which is rooted in century-old colonial documents. Such an examination can help identify areas needing reform and modernization to meet contemporary legal expectations. Furthermore, enhancing legal capacity is crucial. The Indonesian government should invest in research concerning international laws, drawing on the expertise of academic institutions and think tanks. By welcoming input and recommendations from research institutions and universities, Indonesia can build a robust legal framework that meets international standards while also catering to domestic needs.
The conference has shed light on critical issues surrounding Indonesia’s engagement with international law. The reluctance to adopt international legal standards, compounded by capacity issues, presents a challenge that requires immediate attention. By fostering a mindset geared toward alignment with international law, critically evaluating existing legal frameworks, and building legal capacity through collaboration with academic institutions, Indonesia can enhance its appeal to foreign investors. Ultimately, these steps will not only strengthen Indonesia’s legal framework but also contribute to its growth in the global economy.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official position or views of Budidjaja International Lawyers.
