Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)

Abstract

Bilateral Investment Treaties (bits) in Indonesia: A Paradigm Shift, Issues and Challenges

Author(s): Hamzah

This paper examines the announcement by the Indonesian government to terminate its over 60 Bilateral Investment Treaties (BITs) signed with more than 50 countries including Australia, France, Russian Federation and UK among several other developed nations. The announcement echoes the Indonesian government’s future strategies in foreign investments and creates a universally accepted investor-state dispute settlement (ISDS) mechanism in Indonesia. It also shows Indonesia’s attempt to become a sovereign state and act more domestically in the interest of its own people. This study examines the pros and cons of this decision in order to determine the benefits that this decision would bring to the host state without affecting much the foreign investors. In order to study this paradigm shift in the Indonesian climate of foreign investment, this study adopted a qualitative approach to analyse the conditions that led to termination of BITs and the role played by international arbitration tribunals like ICSID. Evidence collected justifies Indonesia’s decision to review its BITs. The implication of this study includes its usefulness in understanding issues and challenges that Indonesia has faced during this period.