Indonesia, as many other countries in the world had recognized the law from the very beginning time before its independency on 17 August 1945. Since the past time and based on some research from the ancient history, Indonesia has many different royal families’ lies from Sabang to Merauke (the two cities lies in the East and West, pictured Indonesia as the country of islands lies from East and West, boundaries by Hindian Ocean).
The royal families had formed many different societies of laws which have been known and used by many law schools in Indonesia as “Hukum Adat”.

Javanese law, Padang law, Batak law, Aceh law, Irian law, Kalimantan law are Hukum Adat or the society’s of laws in Indonesia that classify the moral principles of each society based on their culture, unique characteristics and ethics which they have build to survive with their lives and communities. Yet, many of the elements of this Hukum Adat still can be recognized in some of the laws and regulations applied in Indonesia at this current time, particularly for certain laws and regulations applied for each province.

During the Dutch colonialism for almost three hundred and fifty years before Indonesia’s independency, Indonesia had adopted most of the Dutch values of law to be applied in their societies as the result of the colonialism. Thus, after its independency, Indonesia still adopted such law to be applied in their society.

The History of Indonesian law

After its independency, Indonesia claimed their country as a democratic country with 27 provinces based on its constitution which we called as Pancasila and Undang-undang Dasar 1945 (nowadays the provinces have increased to become 36 provinces).

Being the state of law, Indonesia had adopted the Civil Law (Code Law) derived from the Dutch law as the result of the colonialism. This law which originated from the Roman Empire has the function to establish a body of legal rules which judicial decisions (case law) are not a source of law, as contrasted with the Common law or the United States law.

Although Indonesia has become a greatest Moslems population among the world, still Indonesia has not claimed itself as the Islamic country, such as Malaysia or the Middle East countries, but still, most of the Islamic values have many important roles in determining the laws and regulations in Indonesia.

The Civil Law, adopted from the Dutch Law, recognized and formed the certain important basic laws and the systematic codes in Indonesia, which we called as Kitab Undang-undang Hukum Perdata (Burgerlijk Wetboek) or the Civil Code, the laws concerning with civil rights and remedies, Kitab Undang-undang Pidana, the Criminal Code and Kitab Undang-undang Hukum Acara Pidana, the Criminal Procedures Code, the laws concerning with the criminal acts and criminal procedures brought to the court.

There was also Kitab Undang-undang Hukum Dagang (Wetboek van Koophandel) or the Commercial Code, the law concerning the commercial contracts and regulating the eligible legal bodies to carry out their business in Indonesia. This law now has replaced by the new Law since the enactment of the new Company Law Number 1 in the year of 1995, concerning the Limited Liability Company together with its implementations. Following to this Limited Liability Company Law, in the year of 1999, the Government also issued the New Bankruptcy Law which some of the clauses adopted from the Chapter Eleven from the United States law. Some thoughts say that the Limited Liability Company Law and the Bankruptcy Law have become a breakthrough for the development of the legal system in Indonesia in the era of nineteenth century. Not mentioning other laws that derived from the Code Law, we also have the Land Law that adopted and derived from many Hukum Adat values as the implementation of Indonesian cultures and hence to accommodate the different cultures and characteristics of many provinces in Indonesia. This Land Law, concerning the title or ownership of the land and the land acquisition procedures, has also been renewed and revised by the Government in year 1960.

Also, to participate in the global capital market, the Government has enacted the Capital Market Law in 1995, together with its implementations which regulates many important issues for certain companies both local and foreign direct investment companies in taking part in the globalization and in particularly in the capital market area.

During the crisis in 1997, Indonesia has struggled to settle their debts derived from the 36 collapsed banks as the impact of soared of the Dollar rate against Rupiah rate. These debts have increased for almost IDR 600 trillion at that time.

Through adopting the Thailand system when Thailand struggling with the economy crisis as the impact of the weaken Baht which forced the Thailand government to establish the Debt Restructuring Body to restructure the debts, and followed by that, Indonesia has established new body called the Indonesian Banking Restructuring Agency (IBRA) which has the very important roles to restructure the IDR 600 trillion debts in the five years period.

To enforce the process of this body, the Government has enacted the Government Regulation Number 17 in the year 1998 for the IBRA’s establishment. The important parts of IBRA is to restructure the collapsed banks by way of debt restructuring, eg, take over the collapsed banks by the Government, freeze the collapsed banks, or to settle the debts from collecting the money from the shareholders of the banks who are responsible in restructuring their debts in the collapsed banks.

At the end, given the fact that there are so many Indonesian laws and regulations which have been renewed, revised and issued by the Government of Indonesia to accommodate the current condition and to meet the needs in facing the era of the globalization in the world, we are here to assist you in reviewing, analyzing, and summarize the reliable Indonesian legal sources and regulations which will give you clear understanding on how to implement such regulations based on to your needs.

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