FDI in Tourism and the Feasibility of Incorporating the UN Guiding Principles on Business and Human Rights in Indonesia

Foreign direct investment (FDI) is critical to Indonesia's economic development. Tourism is one of the most appealing investment industries. It has made a significant contribution to employment creation, tax revenue and domestic value addition. However, FDI in tourism has had negative environmental consequences. Moreover, Indonesian trade agreements and investment treaties do not reflect environmental concerns. The schedule under the General Agreement on Trade in Services (GATS) follows a similar trend, although other countries’ practices have shown that Indonesia can add this concern. Domestic laws and policies are also silent because the goal of economic growth outweighs protecting the environment. The United Nations Guiding Principles on Business and Human Rights (Guiding Principles) govern states' obligations to defend human rights and companies' obligations to respect and give remedy. This article examines the feasibility of incorporating the Guiding Principles into FDI in tourism. The Guiding Principles, together with the Global Code Ethics for Tourism, would provide a starting point for more robust legal frameworks for foreign tourism companies and emphasise sustainable development.


Introduction
Foreign direct investment (FDI) results in significant gains for host countries. It provides job opportunities in host nations that are critical for lowering unemployment and poverty. Foreign investors' businesses hired 6.1 million workers in 2013, with 2.4 million secondary and induced jobs totalling 8.5 million. 1 Meanwhile, Lipsey and Sjöholm found that foreign-owned industrial 1 Julian Richards and Elizabeth Schaefer, 'Jobs Attributable to Foreign Direct Investment in the United States' (2016) <www.trade.gov/mas/ian/build/groups/public/@tg_ian/documents/ webcontent/tg_ian_005496.pdf>. Recognising the importance of tourism, governments are taking innovative steps to promote inclusive, competitive and long-term tourism growth. An integrated whole-of-government approach to tourism is considered a critical component of a successful government structure in many nations. Such an approach promotes consistent policy and efficacious public and/or private tourist activities. 6 Nonetheless, some scholars investigated the detrimental environmental effects of FDI on tourism. The so-called 'pollution haven theory' points to FDI's harmful influence on tourism. 7 Some businesses have shifted from states with rigorous environmental regulations to states with more lenient environmental standards, manoeuvring the lack of environmental policy. 8 The United Nations World Tourism Organization (UNWTO) examined how FDI in tourism has impacted the environment due to its dominant position over 2 Robert Lipsey and Fredrik Sjöholm, 'FDI and Growth in  local enterprises. 9 Foreign-owned businesses, such as hotels, were in the majority in some countries, including Indonesia, so the negative consequences of FDI may be greater than domestic businesses. 10 High-end hotels (4-star or 5-star hotels) account for the majority of FDI in Bali, and some of those hotels are part of international hotel chains. Foreign hotels will have a greater environmental impact than local hotels, according to Barrowclough, because  The environment and human rights are intrinsically linked. A clean, safe, healthy and sustainable environment advances our human rights; polluted, dangerous or otherwise unhealthy environments may infringe on them. The United Nations (UN) Guiding Principles on Business and Human Rights (Guiding Principles) were adopted in 2011 in response to the absence of human rights accountability for businesses. 12 These non-binding principles inform states and enterprises on how to prevent harmful human rights consequences.
The Guiding Principles contain three pillars: the obligation of the state to give protection (protect), the responsibility of corporations to respect (respect) and the need to confirm that sufferers of human rights breaches have recourse (remedy). 13 That environmental damage has occurred after the presence of FDI in tourism provides for an interesting analysis of whether the Guiding Principles could be adopted in Indonesian legislation. The incorporation of these principles could help prevent and mitigate the likelihood of environmental damage after the presence of FDI in tourism. This paper is organised as follows. The second section discusses the links between environmental damage and FDI in tourism. The third section explains how Indonesian international agreements do not reflect environmental concerns. The fourth section discusses the domestic laws and the lack of regulation expressly adopting the Guiding Principles. The fifth section discusses the feasibility of incorporating these principles into domestic laws and Indonesian international agreements. It also compares the practices of other countries that have adopted the Guiding Principles. Finally, the sixth section concludes the paper. 12

Environmental Damage and Fdi In Tourism
There has been minimal research on the negative effects of FDI on tourism.
The effects of FDI on tourism have been overlooked 14 in part due to the difficulty in obtaining information and data. 15 Furthermore, this sector is not a single action. 16 Tourism encompasses a broad range of activities, including food and beverage, lodging, sports, transportation, entertainment, culture, trade shows and recreation. The Ministry of Tourism and the International Labour Organization found that upscale hotels in several tourist sites in Indonesia led to a large rise in energy and water consumption and trash creation. 31 The city of Balikpapan, East Kalimantan (2015), reported a rise in solid waste volume due to the city's increasing number of hotels, but some hotels have yet to establish an integrated waste treatment facility.
The construction of hotels and other tourism amenities on Tidung Island, Kepulauan Seribu, Jakarta, resulted in the loss of coastal areas, which Khrisnamurti, Heryanti Utami and Rahmat Darmawan attributed to a lack of spatial planning law. 32 Bali is Indonesia's most popular tourist destination and has been used as a case study in several empirical studies. For instance, due to a lack of planning, the fast development of tourism amenities like restaurants and hotels in Kuta, Badung, Bali did not include public and private waste and sewerage disposal systems and water and electricity sources. 33 Similarly, certain hotels in Bali lacked effective solid waste management, resulting in environmental damage. 34 The growth of tourism amenities in Ubud, Gianyar harmed the ecosystem, straining the water

Agreements Bilateral Investment Treaties
Since 2014, Indonesia has displayed a lack of enthusiasm for joining bilateral investment treaties (BITs). UNCTAD data show Indonesia has terminated roughly 24 BITs. 37 Muchlinski noticed that when investment treaties first emerged, they tended to focus only on economic considerations, disregarding some bad outcomes. 38 As a result, it is crucial to balance investors' legitimate interests (eg a clear and foreseeable investment policy) and the host country's legitimate interests (eg a 'right to regulate' for policy goals, notably environmental concerns). 39 Besides investment liberalisation, protection, promotion and facilitation, UNCTAD recommends that international investments agreements (IIAs) include measures enabling host nations to mitigate negative societal or environmental consequences. 40 Gordon and Pohol detected environmental issues in 133 IIAs or 8.2 per cent of their overall sample. 41 In addition, 30 of the 49 countries analysed had addressed environmental issues in at least one treaty. 42 The countries with the highest levels of concern were Canada (83 per cent), New Zealand (75 per cent), Japan (61 per cent), the US (34 per cent) and Finland (26 per cent). In contrast, only one environmental agreement was found in Egypt and Indonesia out of 73 and 45 accords in the sample, respectively. 43 Indonesia did not join the trend of integrating eco-friendly issues in international investment treaties. This situation could intensify the negative effects  An environmental permit is required to secure a business permit. The project can begin once the business permission has been issued. 54 The Job Creation law weakens the environmental permit's standing. It will be changed into an approval for the environment. Environmental permission will become a prerequisite for the approval of a business permit, alongside other approvals such as construction and spatial plan permits.
The law also establishes a risk-based approach to determining the type of business permit developers and firms must get. 55  The government appears to recognise that the EIA regulations have an issue because of their lengthy approach, which makes them impractical to apply. As a result, replacing the EIA with a form of an environmental norm is more feasible, especially for low-and medium-risk projects. However, a better definition of what constitutes a project with a 'substantial impact' and how it falls into the medium or high-risk category should be established. If this does not occur, a tourism project may not be classed as a high-risk activity, even though it may have a 'substantial impact'. As a result, completing the EIA and involving the impacted communities would be unnecessary.

Un Guiding Principles on Business and Human Rights
A large international debate is currently raging around commercial entities' human rights duties and responsibilities. The binding legal and moral frameworks to guide MNCs are lacking. 59 Responding to this concern, the UN approved the Guiding Principles in 2011. 60 As mentioned earlier, there are three pillars in the Guiding Principles: the governmental duty to give protection, the business responsibility to respect, and the necessity to guarantee that sufferers of human rights violations have access to remedies. 61 The first pillar identifies the state's obligation to protect a person's rights from With the second pillar, MNCs have an autonomous responsibility to uphold human rights that is distinct from the state's responsibilities under the first pillar.
The 'responsibility to respect' originates from a worldwide benchmark of projected conduct for all MNCs, wherever they operate. As a result, the second pillar extends beyond the strict confines of international human rights legislation and into the area of business's social (rather than legal) obligations. 65 MNCs must avoid inflicting harm or violating human rights and take measures to prevent or mitigate such consequences. 66 This pillar highlights MNCs' responsibility to respect human rights and specifies a due diligence process that firms must follow. This pillar necessitates the most profound conceptual divergence from traditional human rights language and has been the Guiding Principles' focal point. 67 The third pillar is that sufferers of negative human rights effects from MNCs must be able to seek redress. Remedies may be accessible through formal methods overseen by the state or through less formal processes overseen by MNC-created self-regulatory bodies. 68 In other words, states must ensure that affected persons have access to an adequate remedy by administrative, judicial or other proper means. 69 In addition to court remedies, state-based non-judicial and non-state-based methods may be employed. 70

Country's National Plan as A Starting Point
The UN Working Group on Business and Human Rights, which is tasked with developing and encouraging the effective implementation of the Guiding Principles, suggests numerous strategic actions that should be included in a country's National and human rights issues are not included as targets and are not explicitly specified in a document that will be used to assure the contentment of human rights during the next five years. It will only be implemented via the four current focus targets.
Women, children, communities and people with disabilities are the four core issues addressed by the fifth-generation NAP. 80 The fact that business and human rights issues are not the main agenda shows that Indonesia seems reluctant to incorporate the Guiding Principles into its legal and moral frameworks. Moreover, the goal of pursuing economic growth has been the main priority. All relevant rules that are considered a barrier to economic growth will be removed.

Other Countries' Practices
Having In France, the duty of vigilance law involves corporations with at least 5,000 employees or 10,000 employees across their entire company to issue an effective vigilance plan outlining risk documentation and prevention measures for severe human rights violations resulting directly or indirectly from their operations. 85

A Responsible Business Proposal and accompanying parliamentary initiative
in Switzerland have been proposed, requiring firms to undertake due diligence in their activities and the companies they manage. 86 It applies to businesses that surpass certain criteria and businesses that engage in specific high-risk activities, irrespective of their size; however, it does not apply to large businesses that engage in specific low-risk activities. 87 In German, the Federal Government stated its intention that all businesses implement company due diligence in a way proportional to their size, industry, and location in the supply and value chain. 88 Since 2018, compliance has been assessed on an annual basis. In the absence of proper compliance, the government will determine additional steps, which might include legislative actions and a broadening of the list of businesses under investigation. 89  rights and obligations between investors and states. Regarding BITs, the fact that Indonesia is proposing many treaties after its termination would provide the perfect momentum to put environmental concerns in future Indonesia BITs.
While mandating due diligence for MNCs in tourism is still unrealistic for now, the Ministry of Tourism could develop a standard of conduct for tourism companies in Indonesia. This standard should be equal to the due diligence process stated in the second pillar of the Guiding Principles. They should be progressively developed as an internal environmental standard to minimise the likelihood of negative environmental impact. Large companies, such as 5-star hotels with more than 2,000 employees, should be the main priority due to their possible impact.
These companies should submit an annual report to the government showing how they have performed due diligence.
In tourism, the Guiding Principles can work hand in hand with implementing the Global Code of Ethics for Tourism (GCET does not mention environmental concerns. Moreover, existing laws and policies have not included this concern, causing the government to have limited options to avoid environmental damage by FDI in tourism.
The UN issued the Guiding Principles, explaining the government's role in protecting human rights and the companies' obligation to respect and access legal remedies. FDI in tourism has led to environmental damage, and international agreements that involve Indonesia do not include environmental concerns.
Therefore, including the Guiding Principles should be a starting point for more robust legal frameworks for MNCs in tourism running their businesses within Indonesia. Moreover, this inclusion can work closely with GCET to emphasise sustainable development.

Business and Human Rights, National Action Plan Implementation of the UN Guiding Principles on Business and Human Rights (The Interministerial
Committee on Business and Human Rights 2017).