New regulation on mandatory use of Bahasa Indonesia falls short of expectations

TEN years after the enactment of the Language Law in Indonesia, President Joko Widodo finally signed its implementing regulation. When it was first enacted, the Language Law raised alarm bells because it imposed an additional burden on contracting parties by requiring them to translate agreements into Indonesian.

Over time, the Language Law also created uncertainties, which can be broadly categorised into three areas: governing language, timing and consequences of non-compliance.

To address these uncertainties, the market has adopted a set of approaches. While many had hoped that the regulation would affirm the market approach that helps especially in promoting foreign investment in Indonesia, it seems to have done the opposite, while introducing new issues.