TEMPO.CO, Jakarta - The Indonesian government has decided to review its bilateral investment treaties (BITs) with several countries in a bid to lend legal certainty and protection to investment, Chief Economic Minister Sofyan Djalil stated on Monday.
"This must be reviewed because it no longer fits in the framework of development. Many BITs were signed in 1960-1970," the coordinating minister for economic affairs remarked after a coordination meeting.
He emphasized that the treaties need to be reviewed in keeping with the current developments in the world with regard to offering investment protection to avoid possible legal issues on investment that can hurt Indonesia or the countries to which the investors belong.
"The key to attracting investment is to offer protection to foreign investors. We need to offer strong protection to an investment, which has not been handled well, to avoid the need for arbitration," he emphasized.
Sofyan pointed out that there were several legal cases that led to disputes between Indonesia and foreign investors. He expressed hope that the new agreements inked later would be able to avoid inconsistencies and legal violations related to investment.
"We saw that several bilateral agreements were made while the economic condition was quite different (from current global situation), and therefore, we will review them," he stated while referring to the assets of Century Bank, Newmont, and Churchill.
Chairman of the Investment Coordinating Board (BKPM) Franky Sibarani remarked that the review will be carried out to adjust with the current economic situation in a bid to ensure order and improve the investment climate.
"Certainly, there will be adjustments due to the FTA (foreign trade agreement) and others, but the point is that in the current five years of investment, we need to give freedom to discuss issues relating to investment," he said.
The idea to review BITs with 67 countries has existed since the government of former president Susilo Bambang Yudhoyono aimed at offering consistency with regard to local and international laws.
Meanwhile, other reasons are aimed at preventing multinational companies of advanced countries from applying pressure and shielding developing countries such as Indonesia from investment risks, he added.