By referring to the data of the Capital Investment Coordination Board throughout the year 2018, the realisation of foreign capital investment (Penanaman Modal Asing or PMA) has reached a value of 293,7 trillion rupiahs. Java Island is still categorised as one of the biggest foreign capital investment destinations compared to other destinations. Meanwhile, the tertiary sector (i.e., sectors of electricity, gas and water; construction; commerce and reparations; hotels and restaurants; transport, warehousing and telecommunications; housing, industrial areas and office space; and other services) are recorded as much more superior to the primary and secondary sectors. However, there have been significant worries about the emerging foreign capital investment that will subsequently contribute to the downfall of the sectors of micro, small and medium enterprises (Usaha Mikro Kecil dan Menengah or UMKM) in Indonesia. In contrast, the change of Investment Negative List (Daftar Negatif Investasi or DNI) does not affect the development of UMKM because the rate of competitiveness between domestic and foreign investment is basically different. The efforts to balance between PMA and the development of UMKM should be based on the Principles for Responsible Investment (PRI). Some related principles, such as society, environment, and government should be a concern for the foreign investors in PMA. This article tries to analyse the regulations either in the region or nationally, in order to foster an easy climate of business (ease of doing business) and to protect UMKM by accommodating PRI in regulation formations especially for PMA. The first issue focused on the national regulation formations, while the second issue stressed the local regulation analysis, especially in Java island, which has more foreign investment.

Original languageEnglish
Pages (from-to)352-368
Number of pages17
JournalInternational Journal of Innovation, Creativity and Change
Issue number12
Publication statusPublished - 2020


  • Foreign capital investment
  • Government
  • National and local regulation
  • Responsible investment


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