FDI on Tourism and the Environmental Damage: What Indonesia’s Trade and Investment Agreements Can Do?

I Gusti Ngurah Parikesit Widiatedja

= http://dx.doi.org/10.20473/ydk.v34i2.7927
Abstract views = 354 times | views = 133 times


The existence of FDI on tourism has provided benefits, covering job opportunities, transfer of technology, government revenue, and the partnership with small and medium enterprises. However, FDI on tourism has also contributed to environmental damage in Indonesia. This paper is aimed to analyse whether trade and investment agreements that involve Indonesia can contribute to prevent and mitigate environmental damage as a result from FDI on tourism. This article is normative research, examining the existing trade and investment agreements that involve Indonesia and compare them with other countries’ agreements. This paper argues that there is evidence to suggest that trade and investment agreements may incorporate provisions in order to ameliorate environmental harm from the existence of FDI on tourism. However, Indonesia has not incorporated any such provisions in its own agreements. Hence, this paper explains that there will be three suggestions to be considered, namely: Indonesia should start putting environmental concern under its trade schedule; Indonesia should consider opening environmental services; and Indonesia should start putting environmental concern in its investment agreements.


Foreign Direct Investment on Tourism; Environmental Damage; Trade and Investment Agreements.

Full Text:



Agreement between Japan and the Republic of Colombia for the Liberalization, Promotion and Protection of Investment, signed 12 September 2011 (not yet in force).

Annette Pritchard, Destination Branding – Creating the Unique Destination Proposition (Butterworth-Heinemann 2002).

Arthur John Burkart and S. Medlik, Tourism. Past, Present and Future (Heinemann 1974).

Christopher S Yoo, ‘Product Life Cycle Theory and the Maturation of the Internet’ (2010) 104 Northwestern University Law Review.

Daniel Bethlehem,[et.,al.], The Oxford Handbook of International Trade Law (Oxford University Press 2009).

Darren Hoad, ‘The General Agreement on Trade in Services (GATS) and Its Impact on Sustainable Tourism’ (2002) 13 Anatolia: An International Journal of Tourism and Hospitality Research.

Diana Barrowclough, ‘Foreign Investment in Tourism and Small Island Developing States’ (2007) 13 Tourism Economics.

Economic Partnership Agreement between the Cariforum States, of the one part, and the European Community and its Member States, of the other part, signed 15 October 2008.

Equations, Weighing the GATS on a Development Scale: The Case of Tourism in Goa, India (Equations 2003).

GDA MacDougall, ‘The Benefits and Costs of Private Investment from Abroad: A Theoretical Approach’ (1960) 36 Economic Record.

Giancarlo Gandolfo, International Trade Theory and Policy (2nd edn, Springer 2014).

Huiya Chen and Deborah L Swenson, ‘Multinational Exposure and the Quality of New Chinese Exports’ (2014) 76 Oxford Bulletin of Economics and Statistics.

I Gusti Ngurah Parikesit Widiatedja, Bunga Rampai Pemikiran Hukum Kontemporer (Udayana University Press 2010).

——, Liberalisasi Jasa Dan Masa Depan Pariwisata Kita (Udayana University Press 2010).

——, Kebijakan Liberalisasi Pariwisata: Konstruksi Konsep, Ragam Masalah Dan Alternatif Solusi (Udayana University Press 2011).

——, ‘Towards Liberalization of Services in ASEAN: Challenges and Opportunities of ASEAN Framework Agreement on Services (AFAS) on Tourism’ (2012) 10 Indonesian Journal of International Law.

——, ‘Retire in Paradise: Urgensi Pengaturan Pariwisata Pensiunan (Retirement Tourism) Di Indonesia’ (2018) 11 Arena Hukum.

I Gusti Ngurah Parikesit Widiatedja and I Gusti Ngurah Wairocana, ‘The Lack of the Environmental Concern in Indonesia’s Bilateral Investment Treaties’ (2017) 3 Hasanuddin Law Review.

——, ‘Fragmented and Unclear Laws and Regulations of Foreign Direct Investment in Indonesian Tourism’ (2018) 5 Padjajaran Journal of Law.

International Monetary Fund, ‘The Balance of Payments Manual 5ed’ (International Monetary Fund, 2018) LINK accessed 9 March 2018.

J.R. Brent Ritchie and Robin J.B. Ritchie, ‘The Branding of Tourism Destinations – Past Achievements and Future Challenges’, the 1998 Annual Congress of the International Association of Scientific Experts (the International Association of Scientific Experts 1998).

Janeen Tang, ‘A Case Study of a Hotel Solid Waste Management Program in Bali’ (University of Waterloo 2004).

Jane Stacey, ‘Supporting Quality Jobs in Tourism’ (OECD Tourism Papers, 2015) LINK accessed 22 August 2018.

Jens M Arnold and Beata S Javorcik, ‘Gifted Kids or Pushy Parents? Foreign Direct Investment and Plant Productivity in Indonesia’ (2009) 79 Jens M Arnold and Beata S Javorcik.

Jonathan Mitchell and Caroline Ashley, Pathways to Prosperity-How Can Tourism Reduce Poverty: A Review of Pathways, Evidence and Methods (World Bank 2007).

——, Pathways to Prosperity – How Can Tourism Reduce Poverty: A Review of Pathways, Evidence and Methods (World Bank 2007).

Julian Richards and Elizabeth Schaefer, ‘Jobs Attributable to Foreign Direct Investment in the United States’ (International Trade Administration, the United States of America, 2016) LINK accessed 2 March 2018.

Khrisnamurti, ‘Dampak Pariwisata Terhadap Lingkungan Di Pulau Tidung Kepulauan Seribu’ (2016) 21 Kajian.

Larry Dwyer and Peter Forsyth, ‘Foreign Tourism Investment: Motivation and Impact’ (1994) 21 Annals of Tourism Research.

Markus Knigge and Caroline Nuffort, Report on Trade, Environment, and Trade in Services (Concerted Action on Trade and Environment 2005).

Martin Feldstein and Charles Horioka, ‘Domestic Savings and International Capital Flows’ (1980) 90 Economic Journal.

Ministry of Tourism and Creative Economy of the Republic of Indonesia in cooperation with the International Labour Organization, Strategic Plan Sustainable Tourism and Green Jobs for Indonesia (ILO 2012).

Mireille Perrin, ‘Preliminary Assessment of the Environmental and Social Effects of Trade in Tourismz’, WWF International (WWF International 2001).

Molly Lesher and Sébastien Miroudot, ‘FDI Spillovers and Their Interrelationships with Trade’ (2008) 80.

Nick Mabey and Richard McNally, ‘Foreign Direct Investment and the Environment: From Pollution Havens to Sustainable Development’, World Wide Fund for Nature (UK Report 1999).

Peter Buckley and Necla V Geyikdagi, ‘Explaining Foreign Direct Investment in Turkey’s Tourism Industry’ (UNCTAD Research Notes, 1996) LINK accessed 17 February 2018.

Peter Forsyth and Larry Dwyer, ‘Foreign Investment in Australian Tourism: A Framework for Analysis’ (2003) 14 The Journal of Tourism Studies.

Peter Haxton, ‘A Review of Effective Policies for Tourism Growth’ (OECD Tourism Papers, 2015) LINK accessed 23 August 2018.

Peter Muchlinski, ‘Policy Issues’ in Federico Ortino and Christoph Schreuer Peter Muchlinski (ed), The Oxford Handbook of International Investment Law (Oxford University Press 2008).

Peter U.C Dieke, ‘Tourism in Sub Saharan Africa: Production-Consumption Nexus’ (2013) 16 Current Issues Tourism.

Raymond Vernon, ‘International Trade and International Investment in the Product Cycle’ (1966) 80 Quarterly Journal of Economics.

Robert Lipsey and Fredrik Sjöholm, ‘FDI and Growth in East Asia: Lessons for Indonesia’ (2010) 852.

Stroma Cole, ‘A Political Ecology of Water Equity and Tourism: A Case Study from Bali’ (2012) 39 Annals of Tourism Research.

The Organization for Economic Cooperation and Development, ‘OECD Benchmark Definition of Foreign Direct Investment 4ed’ (OECD, 2008) LINK accessed 11 March 2018.

——, ‘OECD Tourism Trends and Policies 2016’ (OECD, 2016) LINK accessed 2 February 2018.

Treaty between the United States of America and the Oriental Republic of Uruguay concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005 (entry into force 1 November 2006).

Treaty between the Swiss Confederation and the Republic of Kosovo concerning the Encouragement and Reciprocal Protection of Investment, signed 27 October 2011 (entered into forced 13 June 2002).

United Nations Conference on Trade and Development, FDI in Tourism: The Development Dimension (United Nations 2007).

——,, ‘The Contribution of Tourism to Trade and Development’ (Trade and Development Board, 2010) LINK accessed 11 February 2018.

——, ‘The Contribution of Tourism to Trade and Development’ (Trade and Development Board, 2010) LINK accessed 11 February 2018.

United Nations Environment Programme and World Tourism Organization, Tourism in the Green Economy – Background Report (UNWTO 2012).

United Nations World Tourism Organisation, General Guidelines for the Development of Foreign Direct Investment Indicators on the Tourism Sector (Department of Statistics and Economic Measurement of Tourism 2004).

——,, ‘UNWTO Tourism Highlights 2015 Edition’ (UNWTO, 2015) LINK accessed 12 January 2018.

Widhayani Dian Pawestri, ‘Keadilan Sosial Dalam Perlindungan Kepentingan Nasional Pada Penanaman Modal Asing Di Bidang Sumber Daya Alam’ (2015) 30 Yuridika

Wiwik Dwi Pratiwi, ‘Tourism and Built Environment Changes in Traditional Communities Kuta and Nusa Dua, Bali, Indonesia as the Case Studies’ (The University of Sheffield 2004)


  • There are currently no refbacks.

Copyright (c) 2019 Yuridika

Yuridika (ISSN: 0215-840X | e-ISSN: 2528-3103) by http://e-journal.unair.ac.id/index.php/YDK/index under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Statcounter :

View My Stats

Yuridika has been indexed by:


Yuridika Official Partner :


Full Indexed Service