Internal Legal Protection Provided for Investors Participating in Capital Investment from Political Risks

Abstract

Capital investment is defined as direct investment not portfolio investment, where in the latter the capital investor only owns some stock invested in a company but is not directly involved or has no direct authorities in the management of the company. Capital investment is aimed to build the economy in Indonesia as intended in the 1945 Constitution of the Republic of Indonesia. It is obvious that investment is inextricable from risk, in which higher risk means higher potential profit. This law applies in developing economic markets including those in Indonesia. Any risk transfer taking place involves obligations given to the party that performs the transfer under a particular agreement. The agreement under which transferring or sharing risk is performed is commonly known as insurance agreement. It is, then, essential that internal protection be provided for capital investors. Some theories aimed to help find the solutions to the research problems involve particular legal theories on which the analysis of this research was based: theories of legal protection, legal certainty, investment, and insurance. The methods used in the research were categorised as normative juridical, supported by statute, conceptual, case, and comparative approaches. The analysis of this research is descriptive-based, in which observed phenomena are presented in relation to the aspects observed to profoundly discover the existing conditions. All investors always expect to live a more prosperous life in the future from what they have invested. When the money invested is not circulated without any further financial management, expenses made will just burn the money without a trace along with its value. People seek way to make the money to remain valuable by investing it. From investment, they expect for incremental figures to their invested money. Internal legal protection is provided for the agreement made by investors.

Keywords: legal protection, internal, political risk

DOI: 10.7176/RHSS/9-10-01

Publication date:May 31^st 2019