Reconstruction of the Arrangement of Privileges for Foreign Investors as A Strengthening of the National Economy in Indonesia

Abstract

Foreign investment plays a significant role in Indonesia's economic development; however, preferential treatment granted to foreign investors raises concerns regarding fairness, regulatory clarity, and national economic sovereignty. This study aimed to formulate a regulatory reconstruction and revalidation framework for foreign investor privileges that balances legal certainty, substantive justice, and public welfare. The study employed a normative legal research method involving the examination of legislation, constitutional provisions, international investment agreements, and relevant legal literature. The analysis was grounded in John Rawls's theory of justice, Gustav Radbruch's conception of legal certainty, and Indonesia's constitutional economic principles. The findings identified ambiguities in eligibility criteria for investor privileges, fragmented institutional authority, insufficient requirements for contributions to the national economy, and inadequate mechanisms for periodic regulatory evaluation. The proposed reconstruction included establishing clear statutory eligibility criteria, linking investment privileges to measurable contributions to employment creation and technology transfer, strengthening institutional coordination, introducing defined validity periods, and operationalizing the concept of national interest through transparent legal criteria. The analysis further emphasized the importance of periodic reassessment of investment privileges by considering legal structure, legal substance, and legal culture, alongside economic sovereignty, resilience, and social welfare. The study concluded that integrating regulatory reconstruction with transparent, accountable, and adaptive revalidation mechanisms could provide a normative foundation for aligning foreign investor privileges with equitable and sustainable national economic development. Further empirical research is required to evaluate the proposed framework's institutional feasibility, compatibility with international investment treaty obligations, and practical effectiveness across different investment sectors.