Foreign Direct Investment Inflow into Aceh province of Indonesia After a Peace Agreement

Abstract

Abstract Purpose – This study aims to explain current condition of investment inflow into Aceh Province of Indonesia after peace agreement between Free Aceh Movement and the Government of Indonesia was resolved. This peace agreement was achieved after both parties were involved in political conflict for three decades Methodology – This study applies qualitative methods by using descriptive approach. Data required for this study were obtained from library research by analyzing primary and secondary resources. Primary resources were collected by analyzing current literature. Secondary resources were obtained by reviewing some previous research report, government report and other institution report which are related to this study. All collected data were analyzed by using qualitative analysis. Findings – The results indicate that investment inflows into Aceh Province after a peace agreement have significantly increased. This condition is caused by better investment condition after Free Aceh Movement and the Government of Indonesia agree to seek a peaceful resolution through a peace agreement. It has been noted that political conflict in Aceh had occurred from 4th December 1976 until 15th August 2005. Prior to 15th August 2005 most investors were reluctant to invest in Aceh because unsecure conditions were rampant everywhere.Better investment inflow into Aceh after peace agreement is also motivated by the enactment of Law Number 11 of 2006 on the Governance of Aceh. By having this law the Government of Aceh has more power to manage and attract new investment to be invested in Aceh Province. This law provides more spaces for the Government of Aceh to provide adequate incentives and interesting facilities for certain sectors of investment to attract more inward FDI. Therefore, it is suggested that the Government of Aceh should maintain stable political condition to attract more investment inflows into Aceh in the future.