ABSTRACT
This paper has aim to provide the scientific studies on how the Indonesian Government interprets the MFN principle in its national investment law. The most-favoured-nation principle (hereinafter referred to as MFN principle) is one of the important pillars in the international trading system. The MFN principle provides an indirect standard of protection that attempts to serve an equal playing field among investors and therefore decrease economic distortions in a granting state. Indonesia, as one of the developing countries, has been recognizing the MFN principle in Article 6 (1) Indonesian Investment Act 25/2007 which states that the Indonesian government provides the same treatment to all investors originating from any States making investment in Indonesia. However, the next paragraph of Article 6 asserts that such treatment set forth in prior paragraph shall not apply to investor from certain countries having granted “privilege” under an agreement made with Indonesian Government. The exception in the form of “privilege” as stated within Article 6 (2) shows the contradiction with the previous paragraph. It is a normative legal research using secondary data. The secondary data are included primary, secondary, and tertiary legal materials. The data were collected using library research, then legal interpretation method was employed to analyze the data
