LEGAL SAFEGUARDS IN NUSANTARA’S FDI FRAMEWORK: AN ANALYSIS OF STABILIZATION AND UMBRELLA CLAUSES

The relocation of Indonesia's national capital to Nusantara represents Indonesia's ambition to drive sustainable growth and reduce development disparities, requiring substantial capital injection from both domestic and foreign investors within a clear legal framework. Despite existing regulations such as Government Regulation No. 12/2023 and its amendment Government Regulation No. 29/2024, as well as major reforms through the Job Creation Omnibus Law, normative gaps remain particularly the absence of stabilization clauses and international legal umbrella provisions which undermine investor confidence in long-term legal certainty.

The main research problem lies in the low realization of FDI investment targets in Nusantara compared to objectives, overlapping authorities between the central government and the IKN Authority, as well as regulatory uncertainty and legal protection for investors that can create operational and financial risks.

This research aims to analyze the extent to which Government Regulation No. 12/2023 and Government Regulation No. 29/2024 have provided adequate incentives and protection to attract foreign capital while reducing investment risks in IKN, with particular focus on the need for stabilization and umbrella clauses in the investment legal framework.

The research method employs normative legal research with a comparative approach, utilizing primary legal materials including laws, government regulations, and international agreements, as well as secondary materials from journals, books, and comparative studies. The analysis is supported by the OECD public policy evaluation framework to assess the effectiveness, efficiency, impact, adaptability, and sustainability of regulations.

Research findings indicate that although Government Regulation No. 29/2024 improves several aspects of licensing and incentives, the lack of stabilization and umbrella clauses creates vulnerabilities to regulatory changes and government contract breaches. The disparity in stagnant FDI realization indicates that investor confidence has not fully recovered. As recommendations, Nusantara regulations need to incorporate stabilization and umbrella clauses, clarify the duration and scope of incentives, and strengthen authority harmonization to enhance legal certainty and IKN's global competitiveness.