Since independence the law on foreign direct investment in Indonesia has been determined by a political contest between four competing forces: economic rationalism, economic nationalism, collectivist ideologies and powerful vested interests. The Indonesian political system confers massive powers on the President and therefore this competition has focused on influencing President Suharto's economic policy. In the current era, following the general elections in 1992, the investment regime has become more liberal yet more uncertain as the government has attempted to balance these competing pressures. The latest liberalisation of the investment regulations in 1994 saw the debate take an unusual course, with claims that the regulations were unconstitutional or illegal and threats to take the matter to the Supreme Court.
Faculty of Business staff papers, no. 112
Swinburne University of Technology
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