DOI: https://doi.org/10.14710/jphi.v8i2.204-222

Law and Regulatory Certainty: An Analysis of Its Impact on the Investment Climate and Business Governance in Indonesia

*Ali Huristak Hartawan Hasibuan  -  Faculty of Law, Universitas Islam Kadiri, Indonesia
Nur-Amimi Tahe scopus  -  Faculty of Law, Thaksin University, Thailand

Citation Format:
Abstract

Legal reform is an important way to create regulatory certainty which improves the investment climate and business governance in Indonesia. Yet complexity and disharmony in regulation, inconsistent policy implementation and weak institutional coordination still hinder legal certainty for businesses. The objective of this research is to analyse the implementation of legal reforms in achieving regulatory certainty, to determine the impact of the legal reform on the investment climate and business governance in Indonesia. The research uses a normative legal research approach with descriptive-analytical specifications through legislative, conceptual, and analytical approaches. The data used is in the form of secondary data obtained through literature studies, then analyzed qualitatively through the interpretation and synchronization of laws and regulations. The results of the study show that legal reform has encouraged the simplification of regulations, digitization of services, and improvement of the licensing system, but its effectiveness is still constrained by regulatory disharmonization, inconsistency of implementation, and weak institutional coordination. Regulatory certainty has been proven to increase investor confidence, support ease of doing business, strengthen the implementation of good governance, and increase national investment competitiveness. Therefore, strengthening regulatory harmonization, consistency of law enforcement, and institutional reform are the main prerequisites in creating a sustainable investment climate and more effective governance of the business world.  

Fulltext View|Download Email colleagues
Keywords: Legal Reform; Regulatory Certainty; Investment Climate; Business World

Article Metrics:

Article Info
Section: Research Articles
Language : EN
  1. Mirozul, A., Wati, D. S., & Meliala, A. J. (2025). Risk-Based Business Licensing According Perspective of Investment Certainty in Indonesia. Journal of Progressive Law and Legal Studies, 3(2), 254–268. https://doi.org/10.59653/jplls.v3i02.1723
  2. Rizal, M., & Amelia, Y. (2025). Environmental Risk Management and Audit Costs : A Review of Literature on the Role of Stringent Environmental Policies. Jurnal Pajak Dan Analisis Ekonomi Syariah, 2(1), 47–63. https://doi.org/10.61132/jpaes.v2i1.822
  3. Arifin, F. (2023). Reform and Simplification of Legislative Regulations in Indonesia. Journal of Law and Sustainable Development,11(11),1–17. https://doi.org/10.55908/sdgs.v11i11.2262
  4. Babatunde, A. P., Ajape, M. K., Isa, K. D., Kuye, O., Omolehinwa, E. O., & Muritala, S. A. (2021). Ease of Doing Business Index : An Analysis of Investors Practical View. Jurnal Economia, 17(1), 101–23. https://doi.org/ 10.21831/economia.v17i1.33941
  5. Bagenda, C., Bidasari, A., Purwanto, P., Handoyo, B. T., & Rustam, R. (2025). Legal Certainty on Business Dispute Resolution Through Arbitration. International Journal of Health, Economics, and Social Sciences, 7(3),1199–1203. https://doi.org/10.56338/ijhess.v7i3.8109
  6. Boundi-Chraki, F., & Perrotini-Hernández, I. (2024). Revisiting the Classical Theory of Investment : An Empirical Assessment from the European Union. Journal of Quantitative Economics,22(1),63–89. https://doi.org/10.1007/s40953-024-00385-y
  7. Budi, A. S., Dinata, C., Putra, I. M. A. W. W., & De La Peña, R. F. (2026). Global Currents of Public Management Reform: OECD Trends and Their Adaptation in Indonesian Governance. Journal of Transformative Governance and Social Justice, 4(1), 124–40. https://doi.org/10.26905/j-tragos.v4i1. 16731
  8. Chandranegara, I. S., & Ali, M. (2020). Policies on Regulatory Reformin Indonesia : Some Proposals. Jurnal Media Hukum, 27(1), 55–67. https://doi.org/10.18196/jmh
  9. Contractor, F. J., Dangol, R., Nuruzamman, N., & Raghunath, S. (2020). How Do Country Regulations and Business Environment Impact Foreign Direct Investment (FDI) Inflows?. International Business Review 29(2). https://doi.org/10.1016/j.ibusrev.2019.101640
  10. Du, M. (2024). International Investment Law and the Rule of Law: The Case of China. Washington International Law, 33(2), 8–19. https://digitalcommons.law.uw.edu/wilj/vol33/iss2/5/
  11. Emako, E., Nuru, S., & Menza, M. (2022). The Effect of Foreign Direct Investment on Economic Growth in Developing Countries. Transnational Corporations Review, 14(4), 382–401. https://doi.org/10.1080/19186444. 2022.2146967
  12. Kurniawan, I. D., & Ezzerouali, S. (2024). Revisiting the Principle of Legal Certainty: A Contemporary Analysis through the Lens of Legal Positivism. Nusantara: Journal of Law Studies,3(2),137–146. https://doi.org/10.5281/zenodo.17385496
  13. Syafarudin, S., &. Haris, A. (2025). Digital Transformation in Public Services : A Study of E-Government Implementation in Indonesia. International Journal of Law and Society,2(4),170–179. https://doi.org/10.62951/ijls.v2i4.797
  14. Hutahayan, B., Fadli, M., Amimakmur, S. A., & Dewantara, R. (2024). Investment Decision , Legal Certainty and Its Determinant Factors : Evidence from the Indonesia Stock Exchange Evidence from the Indonesia Stock Exchange. Cogent Business & Management,11(1). https://doi.org/10.1080/ 23311975.2024.2332950
  15. Iriansyah, I., & Yalid, Y. (2026). Normative inconsistencies in Indonesian investment law: Implications for legal certainty and the investment climate. Corporate Law & Governance Review, 8(1), 88–99. https://doi.org/10.22495/clgrv8i1p7
  16. Judijanto, L., Basri, T. S., Yahya, A. S., & Hasibuan, K. (2024). Analysis of the Impact of Regulatory Change, Law Enforcement Effectiveness, and Bureaucratic Accountability on Public Service Quality. West Science Law and Human Rights, 2(1), 53–61. https://doi.org/10.58812/wslhr.v2i01.601
  17. Kharisma, B., Remi, S. S., Wardhana, A & Silalahi, F. R. (2025). Foreign Direct Investment, Institutional Quality and Economic Growth : Empirical Evidence From ASEAN. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi Dan Pembangunan 26(1), 108–24. https://doi.org/10.23917/jep.v26i1.8822
  18. Khomeni, S. A., & Atmoko, A. W. (2025). Digital-Based Business Licensing Reform in Indonesia: An Analysis of the Online Single Submission (Oss) Policy. Asian Journal of Social and Humanities, 4(3), 2531–2540. https://doi.org/10.59888/yqvv9061
  19. Koeswayo, P. S., Handoyo, S., & Hasyir, D. A. (2024). Investigating the Relationship between Public Governance and the Corruption Perception Index. Cogent Social Sciences,10(1). https://doi.org/10.1080/23311886.2024.2342513
  20. Lelono, A. J., Tohari, M., & Sejati, H. (2024). The Urgency of Legal Reform for the Legality of Digital Currency in Indonesia. Unes Law Review,6(4),11400–11407. https://doi.org/10.31933/unesrev.v6i4.2156
  21. Astariyani, N. L. G., Hermanto, B., da Cruz, R., & Wisnaeni, F. (2023). Preventive and Evaluative Mechanism Analysis on Regulatory and Legislation Reform in Indonesia. Law Reform, 19(2), 248-269. https://doi.org/10.14710/lr.v19i2.55819
  22. Masnun, M. A., Prasetio, D. E., & Maalikatussofa, M. (2025). Reconstruction of the Normative Legal Research Paradigm in Responding to Global Challenges : An Epistemological Analysis. Novum: Jurnal Hukum, 12(3), 372–384. https://doi.org/10.2674/novum.v12i03.74364
  23. Al Alawi, M. N. K. (2024). Implementasi Teori Law as a Tools of Social Engineering Mahkamah Konstitusi sebagai Instrumen Kontrol Sosial dalam Sistem Hukum Indonesia. Indonesian Journal of Law and Justice, 2(2). https://doi.org/10.47134/ijlj.v2i2.3393
  24. Noviandra, A., Handoyo, S. A., & Siswoko, L. S. (2025). The Impact of The Omnibus Law on Job Creation on The Investment Climate In Indonesia. Journal of Law, Social Science and Humanities, 3(1), 197–207. https://myjournal.or.id/index.php/JLSSH/article/view/485
  25. Ostapenko, H. (2023). The Role of Legal Certainty Principle In Provision Of Access To Justice In Ukraine In Wartime. Access to Justice in Eastern Europe, 5(20), 1–13. https://doi.org/10.33327/AJEE-18-6.3-a000306
  26. Pardede, M. (2023). Investment Regulatory Reform In Indonesia (An Effort to Increase the Competitiveness Climate of Investment). Jurnal Penelitian Hukum De Jure, 23(2), 131–142. http://dx.doi.org/10.30641/dejure.2023.V23.231-244
  27. Putri, R. A. (2026). Investment Law and Realized Investment in Indonesia: An Empirical Legal Analysis of Regulatory Reform, Institutional Quality, and Capital Formation in 2019-2025. Indonesian Journal of Law, Governance, and Regulation, 1(1), 31–47. https://journal.privietlab.org/index.php/IJLGR/article/view/1887
  28. Rao, A., Ali, M., & Smith, J. M. (2024). Foreign Direct Investment and Domestic Innovation : Roles of Absorptive Capacity , Quality of Regulations and Property Rights. PLOS ONE,19(3),1–15. https://doi.org/10.1371/ journal.pone.0333528
  29. Haisa, H., Insan, A. N., & Hamid, M. (2024). Implementation of Online Submission Risk Based Approach (Oss-Rba) System for Business Actors in Order to Accelerate Business Licensing. Journal La Bisecoman, 5(3),429–42. https://doi.org/10.37899/journallabisecoman.v5i3.2122
  30. Muhammad, R., Sitompul, S. M., Zafarovich, T. S., & Embong, R.(2025). The Reduction of Criminal Justice Policy in Indonesia : Justice versus Virality. Journal of Human Rights, Culture and Legal System, 5(2), 442–472. https://doi.org/10.53955/jhcls.v5i2.637
  31. Setyawan, Y., Erliyana, A., Makarim, E., Sjarif, F. A., Dewi, L. R., & Sukma, A. N. A. (2025). Digital Government Post-Reform in Indonesia: Normative Developments and Implementation by State Organizing Institutions. Law Reform, 21(1), 155-179. https://doi.org/10.14710/lr.v21i1.68556
  32. Shcherbanyuk, O., Gordieiev, V., & Bzova, L. (2023). Legal Nature of the Principle of Legal Certainty as a Component Element of the Rule of Law. Juridical Tribune, 13(1), 22–31. DOI: 10.24818/TBJ/2023/13/1.02
  33. Sinaga, E. J. (2022). Implementation Of Regulatory Policy In Government Agency. Jurnal Ilmiah Kebijakan Hukum, 16(2), 323–340. http://dx.doi.org/10.30641/kebijakan.2022.V16.323-340
  34. Sinervo, L-M., Vikstedt, E., Laihonen, H., & Pulkkinen, M. (2026). Public Management for a Sustainable Future: Insights from a Systematic Literature review. Public Money & Management, 9(62), 1–16. https://doi.org/ 10.1080/09540962.2026.2631591
  35. Singgir, N. Y., Ferriswara, D., IPramudiana, I. D., & Kamariyah, S. (2025). Policy Implementation in Indonesia : A Systematic Review of Recent Trends and Practices in Public Administration and Governance. Kajian Administrasi Publik Dan Ilmu Komunikasi, 2(3), 120–148. https://doi.org/ 10.62383/kajian.v2i3.574
  36. Suhardi, U. U. ., Pribadi, U., & Losi, Z. (2023). The Effects of Good Governance Principles: Accountability, Transparency, and Participation on Public Trust in Village Funds Management. International Journal of Social Science and Business, 7(4), 1050–1060. https://doi.org/10.23887/ijssb.v7i4.57648
  37. Toyi, A. R., & Hamidun, E. Z. P. (2025). Establishing Legal Certainty in the Digital Era: Challenges and Solutions. Estidiante Law Journal, 7(2), 444–460. https://doi.org/ 10.33756/eslaj.v7i2.31630
  38. Widiatno, H. S., & Harris, F. (2025). Existence of Legal Certainty for Foreign Investors in Danantara as a Form of Investment Governance Reform. Jurnal Reformasi Hukum,29(2),215–26. https://doi.org/10.46257/jrh.v29i2.1287
  39. Widiyono, T., & Khan, M. Z. K. (2023). Legal Certainty in Land Rights Acquisition in Indonesia’s National Land Law. Law Reform,19(1),128-147. https://doi.org/10.14710/lr.v19i1.48393
  40. Wujarso, R., Hakim, A. R., Faizah, N., Yasin, V., & Andhitiyara, R. (2025). Digital Transformation in Public Sector Institutions: A Systematic Literature Review and Comparative Country Analysis. Al-Ishlah: Jurnal Pendidikan, 17(4), 6219–6134. https://doi.org/10.35445/alishlah.v17i4.8765
  41. Wati, Y., Chandra, T., Irman, M., &. Rahman, S. (2024). Green Accounting, Corporate Governance, Sustainable Development : The Moderating Effect of Corporate Social Responsibility. The Indonesian Journal of Accounting Research, 27(2), 213–242. http://doi.org/10.33312/ijar.786
  42. Zahran W. S., Airi, T., &. Saengsroi, J. (2023). Implementation of Good Governance Principles in Improving Public Services : A Case Study of the Ministry of Education and Culture. Ilomata International Journal of Social Science, 4(1), 119–131. https://doi.org/10.52728/ijss.v4i1.651
  43. Taufik, A. I., & Dewi, R. I. (2020). The Urgency to Revitalize Indonesia ’ s Regulatory Reform Through Evaluation and the Re-Arrangement of Regulatory Database. Proceedings of the 3rd International Conference on Law and Governance (ICLAVE 2019) 130(I19), 103–110. https://doi.org/10.2991/aebmr.k.200321.014
  44. Zhang, X., & Liu, W. (2021). The Rule of Law and Foreign Direct Investment. Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021), 20(3), 118–122. https://doi.org/10.2991/assehr.k.211209.019

Last update:

No citation recorded.

Last update:

No citation recorded.