External Legal Protection for Capital Investors from Political Risk

Abstract

Constitution suggests that economic development in Indonesia must involve participation of the society, as reflected by Article 33 Paragraph (4) of the 1945 Constitution of the Republic of Indonesia after amendment. The definition of togetherness as mentioned in Article 33 Paragraph (4) should be viewed from wider perspective. It is essential that people be aware that fund and capacity of the government are still an issue when it is linked to the economic development, given that the development is a complex matter. Therefore, the participation from the society is necessary to help achieve the success in national development. Investment can be considered to support the development, either it is domestic investment or foreign investment. In terms of risk transfer, it surely involves some liabilities embedded to parties transferring the risk based on the agreement to which the transfer is bound. The agreement aimed to regulate the risk transfer is known as insurance agreement. Therefore, it is essential for investors investing their capital to get external protection.

The legal theories consisting of legal protection, legal certainty, investment, and insurance were used in this research, while the method was based on normative juridical, supported by statute, conceptual, case, and comparative approaches. The obtained data was analysed with descriptive method where the related phenomena were studied to vividly discover existing condition. The measures taken to assure that the regulations and laws regarding investment and investors, including small and medium enterprises, must be clearly implemented and enforced, transparent, easily accessed and must not give incremental burden. The government needs to consider uncertain policy including predictability and transparency matter, both of which are still taken as the biggest impeding factors in investment. Perspective of investors must also be given to make and revise policy. It is essential that investors understand practical implication of the regulation that regulates the investment regarding what needs to be met and the procedures required in public review and process of appeal in case of disputes.