Legal services in Indonesia: An interview with the British Ambassador to Indonesia and Timor Leste
Indonesia is one of the fastest growing economies in the world and of increasing interest to UK firms. We spoke with Ambassador Owen Jenkins about the legal sector, investment and business opportunities in Indonesia.
Being the largest economy in South East Asia, Indonesia is predicted to be one of the top five economies globally by 2050. The economic and political outlook for the country is positive, with a young population, a popular and democratically elected government, as well as a rich endowment of natural resources.
Indonesia's legal system primarily follows the civil law system. It is a mixture of the traditions which have influenced it over the centuries. Only one category of lawyer is recognised in Indonesia, that is the advocate (advokat), a term which is used in relation to all types of lawyers who provide professional legal services, either in or out of court. This includes advocates, practising lawyers (public and private), in-house lawyers, legal counsel and legal consultants.
To acquire a licence to practise as an advocate, an applicant must be:
- a national of the Republic of Indonesia
- domiciled in Indonesia
- at least 25 years old
- a law school graduate who has taken the Pendidikan Khusus Profesi Advokat (PKPA), which is the special education professional advocate qualification
- of good conduct and integrity, as well as honest, responsible and fair
In addition, they must:
- not work as a civil service or state official
- have passed the bar exam organised by the advocates' association
- have interned for at least two consecutive years in a law office
- never have committed an offence that is punishable by imprisonment of at least five years
What is the Embassy’s understanding of the legal sector in Indonesia?
As you would expect in such a vast country, the legal system is extensive. It is a codified system, unlike the English and Welsh common law system, and only domestically qualified professionals can practise, with licenses limited to Indonesian nationals who live in the country.
Foreign lawyers can become involved by obtaining a work permit as a “non-Indonesian legal consultant” (as determined by the Ministry of Law and Human Rights, Regulation No. 26 of 2017).
Which are the leading sectors in Indonesia and the sectors they identify as ‘investment friendly’? What is their view about the legal sector amidst these?
Indonesia is seeking to make its market “investment friendly”, for example through the recent Omnibus Law on Job Creation. We are working with them to identify key sectors where there is most scope for increasing UK/Indonesia trade and to boost new investment and partnership opportunities.
We have just concluded a Joint Trade Review (JTR), launched in 2019, as the main vehicle for this. The JTR focussed on education, agricultural products, food and beverages, technology, pharmaceutical and healthcare, infrastructure and transportation, wood and wooden products, renewable energy, financial and professional services, and the creative economy.
On the back of the JTR, we have signed a memorandum of understanding (MoU) to establish a Joint Economic and Trade Committee (JETCO) (April 2021). Through the JETCO, we will look to boost mutual trade and investment in key sectors by addressing issues of market liberalisation and market access, also supporting the Indonesian government to deliver its sustainable development objectives.
Initially, the JETCO will focus on food, drink and agricultural products, and renewable energy/green growth. The Indonesian and UK governments will establish cross-government sectoral working groups, bringing in industry players from both sides.
The government of Indonesia’s work in this area has been bearing fruit. There are now only six wholly closed sectors and Presidential Regulation No. 10 of 2021 has dramatically reduced the number of sectors with restrictions on investment. The UK has been supporting Indonesia to simplify its business licensing, with the introduction of a risk-based approach through the Omnibus Law. But it will take time for the impact of these measures to be felt.
We have also encouraged Indonesia to open up to competition, through legal and process developments in the Competition Commission and in terms of project commissioning – but many sectors are still state-owned enterprise (SOE) dominated. The legal system is obviously an important part of this work, as a sector and given the importance of legal certainty to foreign investors across all industries.
What are current investment conditions in Indonesia? What initiatives is the Embassy actively supporting?
As I mentioned, Indonesia is keen to attract significant investment creating local jobs, transfer of knowledge to locals, and export opportunities. President Joko Widodo has put particular emphasis on enhancing the investment climate. We hope that the establishment of a UK/Indonesia ministerial JETCO will be the next significant step forward, by creating an annual dialogue for bilateral trade improvement and underpinning structures to help address barriers to trade.
We also continue to support the simplification of business licensing, improved regulatory processes and more effective competition law through embassy-supported programmes, as well as a range of work to support the transition to a low-carbon economy.
How do you look at Indonesia as an international destination for doing business 10 years down the line? Why should UK businesses be looking at Indonesia in coming years?
Indonesia is the largest economy in the Association of Southeast Asian Nations ( or ASEAN), producing about 40% of the region's GDP. It is also the world’s tenth largest economy in terms of purchasing power parity.
Pre-COVID growth was steady at 5%, but in 2020 the economy contracted by 2.07%. It is predicted to return to trend growth in 2022.
Indonesia’s population is already 270 million, making it the world’s fourth most populous country – and third largest democracy. And that population is overwhelmingly young, with over half the population under the age of 30. Two million new workers enter the labour market each year – a huge opportunity but also a challenge, explaining why the President has put so much emphasis on building education and skills – another area with great potential for UK/Indonesia partnership. The middle class is set to grow from 45 million to 135 million by 2030, helping to make Indonesia (by some predictions) the seventh largest economy by 2030 and potentially the fourth largest by 2050.
It is this scale, and the resulting large consumer base, which is driving much of the interest we see from British business – and a recent business perception survey we did highlighted this as the key reason for doing business here.
Are there any projects that the Embassy is currently supporting, and what does the investment/business climate look like?
The UK has a comprehensive and deep diplomatic relationship with the government of Indonesia, recognising its significant economic and political status and huge potential.
We have a range of official development assistance programmes, in particular supporting:
- sustainable development objectives, with a strong focus on low carbon development
- an inclusive, strong and safe digital economy
- economy-wide and sector regulatory reform
- vocational skills
A common theme across all these areas is the UK’s desire to support Indonesia in its work to improve the business climate and openness to foreign investment and partnership.
Find out more information about our work in Indonesia
We would like to thank ambassador Owen Jenkins and his team at the British Embassy in Jakarta for their contributions to this piece.
If you're interested in our work in Indonesia or need more information, email firstname.lastname@example.org .