Green FDI Decline, Domestic Investor Shift, and Indonesia's Energy Transition Legal Study
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This article investigates the structural anomaly in Indonesia's energy transition when green Foreign Direct Investment sharply declines while domestic investment surges very massively. Utilizing doctrinal legal research through regulatory, conceptual, and comparative approaches, this study examines the related investment landscape. Findings prove that the investment contraction stems from expensive transaction costs due to environmental permitting rigidity, exploitative monopoly procurement contracts, and restrictive local component requirements. Conversely, domestic capital dominates through relational flexibility within captive electricity utility downstreaming. The recent component relaxation policies actually introduce secondary legal uncertainties and discriminatory practices against domestic banking syndications. To resolve this normative clash, this research recommends reconstructing the legal architecture by implementing permitting acceleration, establishing an independent electricity procurement agency to ensure risk allocation equilibrium, harmonizing inclusive policies, and leveraging the sovereign wealth fund institution within blended finance schemes to secure commercial bankability, absolute legal certainty, and comprehensive spatial ecological justice for all global actors.
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