Foreign Investment

Simon Butt and Tim Lindsey

in Indonesian Law

Published in print August 2018 | ISBN: 9780199677740
Published online October 2018 | e-ISBN: 9780191757242 | DOI:
Foreign Investment

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Successive governments have emphasized Indonesia’s need for greatly increased foreign investment but have not matched this with sufficient reform to attract large amounts of it. This chapter begins by describing the requirements for foreign investment, including establishment of PMAs, or foreign investment companies, before considering the restrictions that apply to them, such as the ‘negative list’ of sectors closed to investors, or open with restrictions. It looks at important court decisions that have made foreign investment more difficult, along with the share divestment and onshore ore processing rules that have had the same effect, particularly in the mining sector. The chapter then outlines the law relating to commercial arbitration, including the rules limiting the enforcement of foreign awards in Indonesia. The last topic covered is public-private partnerships (PPPs) and the Indonesian Investment Guarantee Fund, which guarantees payment of state liabilities to foreign investors but struggles to attract new projects.

Keywords: Indonesia; Indonesian law; foreign investment law; PMA companies; mining; share divestment; commercial arbitration; bilateral investment treaties; investor state arbitration; Indonesian Investment Guarantee Fund

Chapter.  13272 words. 

Subjects: Constitutional and Administrative Law

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