From Occupation to Strategic Cooperation: Indonesia And Timor-Leste BIT’s as a New Institutional Economics

This study analyzes how the New Institutional Economics (NIE) theory, through the preparation of the Bilateral Investment Treaty (BIT) is used to protect bilateral cooperation activities between Indonesia and Timor-Leste, especially to provide certainty and protection for investors in making investments. The importance of preparing the BIT between Indonesia and Timor-Leste will be a strategic step toward increasing bilateral cooperation between the two countries, which remains generally non-binding, into an agreement with international legal force. The high value of Indonesia's outward investment in Timor-Leste requires an institutionalization tool that can legally bind both countries. The Bilateral Investment Treaty is an institutional tool that can provide clarity on the norms, ethics, and rules that will regulate investment cooperation between the sovereign entities, Indonesia and Timor-Leste.