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

Bulletin of Indonesian Economic Studies, Vol. 44, No. 2, pp. 239-262

Sydney Law School Research Paper No. 09/29

27 Pages Posted: 7 May 2009  

Simon Butt

The University of Sydney Law School

Timothy Lindsey

Centre for Indonesian Law, Islam and Society, Melbourne Law School

Date Written: May 7, 2009

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 management' 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.

Keywords: Indonesia, law, constitutional law, judicial review, comparative law, economic policy

JEL Classification: K10, K30

Suggested Citation

Butt, Simon and Lindsey, Timothy, Economic Reform When the Constitution Matters: Indonesia's Constitutional Court and Article 33 of the Constitution (May 7, 2009). Bulletin of Indonesian Economic Studies, Vol. 44, No. 2, pp. 239-262; Sydney Law School Research Paper No. 09/29. Available at SSRN: https://ssrn.com/abstract=1400505

Simon Butt (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

Timothy Lindsey

Centre for Indonesian Law, Islam and Society, Melbourne Law School ( email )

Melbourne Law School
185 Pelham Street
University of Melbourne, VIC, 3010
Australia
+61 3 834 48134 (Phone)
+61 3 8344 4546 (Fax)

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