The Urgency of Reforming Economic Crime Regulations and Integrating Law Enforcement Practices
The International Law Seminar, held in conjunction with the 75th Anniversary of the Indonesian Prosecutors Association (Persaja) on 5 May 2026, is more than just a ceremonial event. The seminar, themed ‘Legal Aspect of Managing The JCI Systemic Crisis and Its Implications for National Economic Stability’, represents an effort by the professional organisation of prosecutors to contribute to improving the quality of law enforcement, which directly impacts economic stability and national development. It is recognised that the role of law and its enforcement apparatus extends beyond maintaining social order; law must also be utilised to achieve social welfare.
As John Stuart Mill posited, justice refers to a set of rules that protect rights deemed essential for societal welfare. This concept is highly relevant to the modern rule-of-scale state regarding the importance of protecting individual rights and creating policies that benefit the majority. From this perspective, the dynamics in the capital market in early 2026 should not merely be viewed as business activities or economic phenomena. The serious warnings and the interim freeze decision by Morgan Stanley Capital International (MSCI) serve as an alarm regarding the importance of a clear economic legal framework and the strategic role of law enforcement in maintaining national economic stability. There are at least three reasons driving the collective awareness of the need for a strong and integrated national economic legal framework.
First, the limitations of sectoral regulations in the form of administrative penal law are insufficient to face various economic issues and their evolving dynamics. For instance, Law Number 8 of 1995 concerning the Capital Market is perceived as unable to address serious challenges posed by modern operating modes such as algorithmic trading manipulation, spoofing, layering, and market manipulation via digital platforms. Similarly, law enforcement faces limited access to cross-jurisdictional transaction data and the complexity of proving capital market crimes, which can cause systemic impacts on financial market stability.
Second, the fragmentation of economic crime regulations has reached an alarming level. Various sectoral laws, each containing criminal provisions in the economic field, often possess different definitions, scopes, criminal penalties, enforcement procedures, and enforcement agencies, thereby creating a ‘legal labyrinth’ that benefits economic criminals. Furthermore, this fragmentation leads to overlapping jurisdictions and inconsistent application of criminal sanctions. There is also the issue of ‘legal lacunae’ (legal gaps) in cross-sectoral areas, which allows perpetrators to find refuge, as well as inefficiencies in processes where multiple laws must be referenced simultaneously in a single case, slowing down investigations, prosecutions, and court proceedings.
Third, Emergency Law Number 7 of 1955 (the Economic Crime Law) is no longer adequate as a legal framework, particularly in integrating various sectoral economic regulations and optimising the law enforcement process against economic crimes. Enacted on 11 May 1955, this law was fundamentally designed for the economic needs of the early independence era. Its primary focus remains on controlling goods, prices, hoarding, and foreign exchange reserves, relying on outdated instruments.
Although it regulates the investigation, prosecution, and adjudication of economic crimes, the current regulatory construction struggles to address modern economic crimes, which have become far more complex, cross-sectoral, and cross-jurisdictional, utilising technology, involving corporations, financial instruments, and sophisticated asset concealment schemes. Therefore, absorbing various related laws into a single primary regulation is an urgent necessity to create effective law enforcement in the economic sector.
Additionally, the approach of the current Economic Crime Law is still primarily oriented towards the punishment of individuals (in persona). However, the key characteristic of modern economic crime is not just a violation of legal order, but the loss of state revenue, the diversion of national wealth, the disruption of business competition, and the weakening of the state’s capacity to fund development. Consequently, a paradigm shift is required—moving from an ‘in persona’ approach to an ‘in rem’ approach that emphasises the tracing, freezing, seizure, and forfeiture of illegal gains, as well as the recovery of assets resulting from economic crimes.
This shift in approach is vital because economic crimes inherently cause direct and indirect damage to state finances, the national economy, and societal welfare. As a form of responsibility to ensure social welfare, the criminal process should be positioned as a corrective instrument to return state wealth, improve governance, close revenue leakages, and strengthen the government’s fiscal capacity to perform its functions of development and public service.