Economic Reform When the Constitution Matters: Indonesia's Constitutional Court and Article 33

Abstract

Article 33 of Indonesia's Constitution requires the state to 'control' important branches of production and natural resources. The meaning of 'control' has been a matter of significant debate since Indonesia's independence: does it require the state to manage directly, or is regulation enough? The government has recently sought to break down government monopolies and attract private investment in key sectors. To this end it has enacted a raft of new statutes, but they have been challenged in Indonesia's new Constitutional Court. The Court has opted for the 'direct manage ment' interpretation of article 33, striking down statutes that implicitly interpret it as requiring government regulation only. This paper discusses these decisions and, more broadly, problems arising from judicial intervention in economic policy formation. It also considers how the government has sought to circumvent the decisions, and the possible consequences of state non-compliance for the Court's future.

The Politics of Marketising Asia

“…Their subsequent meeting with the newly installed President Soekarno in October 1945 saw these companies handed over to the new Republic of Indonesia, with the Electricity and Gas Bureau under the Department of Public Works and Energy charged with oversight and development of the electricity sector. At the same time, Article 33 of the new constitution placed the government as the primary guardian and owner of the country's energy resources, essentially nationalising energy assets and setting in place state-led control of the sector (see Butt and Lindsey 2008). These moves were popularly embraced and reflected a nationalist backlash against colonial control of Indonesia's natural resources, combined with Soekarno's political vision to champion national development through state-owned enterprises (SOEs).…”

Implementation of Law Number 6 of 2014 Concerning Village for Budgeting Plan in Sidoarjo Regency

“…[5] The number of village authorities and budgetary support resources received by the village are listed in Article 72ayat (1) of Law Number 6 of 2014 concerning Villages. [6] But in practice, adjusting village governance is not as easy as expected. This is due to various normative and empirical factors.…”

Survey of recent developments

“…The government's response to previous cases brought to the Constitutional Court indicates that it will not always immediately follow the Court's rulings (Butt and Lindsey 2008). It acted swiftly in response to the Court's decision on BPMigas, but it is allowing Indonesia's existing 1,300 RSBIs to operate until the end of the 2012-13 academic year, in June.…”

“…The ensuing judicial review saw the Constitutional Court rule BPMigas unconstitutional, having considered point 2 of article 33: 'land, waters and natural resources within shall be under state control and shall be used for the greatest benefit of the people'. The Court's decision hinged on its interpretation of 'state control', which has long been a contentious issue (Butt and Lindsey 2008). In 2003, a judicial review of Electricity Law 20/2002 led to the development of an analytical framework of state control to aid in the interpretation of article 33 (Al'Afghani 2013).…”