Investment Policy Brief 1, July 2015

Indonesia’s Perspective on Review of International Investment Agreements

The South Centre releases a new policy brief series focusing on international investment agreements and experiences of developing countries.

As part of this series, the publication of Investment Policy Brief No. 1 entitled by Mr. Abdulkadir Jailani briefly describes Indonesia’s experience with at least six investor-state dispute settlement (ISDS) cases. It also explains Indonesia’s decision to discontinue its existing international investment agreements (IIAs); to date, 17 out of 64 IIAs have been discontinued by Indonesia. The paper explains the rationale for this important policy measure.

The paper describes Indonesia’s review of its 64 Bilateral Investment Treaties (BITs) as well as the 5 Investment Chapters under various free trade agreements it is party to. The review undertaken by Indonesia envisages a critical evaluation of the impact of existing IIAs on the Indonesian national economy, and formulation of a new approach towards IIAs that will be fine-tuned in favor of its interest in pursuing national development goals.

The brief elaborates on the rationales of the review. It also explains how the review process is being undertaken and the challenges faced during this process, including on whether the review will scare off investors, how to strike the balance between protection to investors and policy space preservation, problems of investment chapters in free trade agreements (FTAs) or economic partnership agreements (EPAs), the implications of survival clauses and the development of a new model of IIA.

The brief also attempts to present a set of critical outlooks to some outstanding issues, both substantive and procedural, that appear during the review.

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