Analysing Indonesia’s Foreign Direct Investment Policy Framework

Possessing several location advantages, Indonesia has been acknowledged as one of potential foreign direct investment (FDI) destinations in Asia. Not only rely upon its location advantages to attract foreign investors, but a country also needs a framework consists of regulations and policies designed to enhance the investment climate. Indonesia already has an investment framework which is mainly derived from Law 25/2007 on Investment which mainly regulates principles, policies and procedures to invest in Indonesia, both for domestic and foreign investment. This paper attempts to analyse Indonesia’s FDI policy framework which includes core FDI policy, supplementary policy and outer-ring policy based on relevant literature. This paper concludes that Indonesia’s FDI policies are effective to attract FDI even though there are rooms for improvement