foreign direct investment, accountability mechanism, transnational corporations, Indonesia
A number of empirical studies have shown that foreign direct investment has benefited the Indonesian economy, accelerating Indonesia’s export of goods, creating more jobs, increasing productivity and facilitating technology spillover. At the same time, it has also negatively affected the environment, the working conditions of local residents, and the social, cultural, and economic rights of local communities. Most significantly, the activities of transnational corporations have been a reason for a number of violent conflicts. Indeed, as foreign direct investment inflow increases, conflicts between transnational corporations and local communities in Indonesia intensify. This situation has not developed in the absence of laws and institutions but these have not been working efficiently. This article assesses Indonesia’s regulatory and institutional framework for dealing with human rights violations by foreign investors. It is argued that there are crucial challenges that need to be taken into account in order to establish a strong accountability mechanism for human rights violations by transnational corporations in Indonesia, mainly inadequate regulatory coverage and insufficient institutional support. Until these limitations are addressed, violations of human rights by transnational corporations will continue to occur. As victims have limited access to redress, conflicts involving transnational corporations will likely remain high in the years ahead.
I. Prihandono, Transnational Corporations and Human Rights Violations in Indonesia (July 22, 2013). Australian Journal of Asian Law, Vol. 14, No. 1, Article 5, 2013