Warta Ekonomi, Jakarta — More than 70 civil society organizations across Southeast Asia have called on governments of the Regional Comprehensive Economic Partnership (RCEP) member states not to include the Investor-State Dispute Settlement (ISDS) mechanism in the RCEP General Review, which is scheduled to begin in 2027.
The call was made during the Bisnis Indonesia Forum, titled “Challenges of a Just Energy Transition in Trade and Investment Agreements,” held at the Faculty of Law, Universitas Indonesia (UI), in Jakarta on Wednesday (August 12, 2026).
Climate issues are among the key concerns underlying opposition to ISDS. Civil society groups argue that the mechanism could constrain governments’ policy space to accelerate the clean energy transition and reduce emissions.
Transnational Institute (TNI) researcher Rachmi Hertanti said ISDS gives multinational corporations the opportunity to sue governments when climate- or energy-related policies are deemed detrimental to their investments.
According to Rachmi, the threat of lawsuits involving substantial compensation claims could make governments more cautious in implementing climate policies. This situation could ultimately hinder the implementation of a just energy transition.
Data presented at the forum showed that 75 percent, or 192 out of 257 coal-fired power plants (CFPPs) still operating worldwide, are protected by at least one agreement containing an ISDS mechanism.
In the RCEP region, such protection through investment agreements reportedly covers 88 percent of foreign-owned CFPPs in Indonesia, 85 percent in Vietnam, 71 percent in China, 86 percent in Australia, and 30 percent in the Philippines.
Deputy Director of Publish What You Pay (PWYP) Indonesia Meliana Lumbantoruan said the high proportion of foreign-owned coal capacity covered by investment agreements could pose a challenge for Indonesia if the government tightens policies governing the coal sector.
According to Meliana, policies aimed at restricting the operation of coal-fired power plants or strengthening emissions standards could face legal challenges if investors argue that such measures adversely affect their investments.
She warned that the ISDS mechanism should not become an obstacle to Indonesia’s climate policies. The government needs sufficient policy space to make decisions related to reducing fossil fuel use and developing clean energy without pressure from potential compensation claims.
Chien Yen Goh of Third World Network also highlighted the potentially significant compensation involved in ISDS disputes. Referring to the ConocoPhillips v. Venezuela dispute, he said compensation in an ISDS case could amount to as much as 11.5 percent of a country’s gross domestic product (GDP).
Such potentially large compensation claims could put pressure on a country’s fiscal capacity. Budgets that could otherwise be allocated to public services and climate programs could instead be absorbed by litigation costs or compensation payments to investors.
Civil society concerns extend beyond energy policies to environmental protection and natural resource management.
Adam Wolfenden of Pacific Network on Globalization (PANG) Fiji said the threat of ISDS lawsuits in some cases could place governments under pressure when revoking mining permits deemed harmful to the environment or Indigenous peoples’ rights.
Meanwhile, Joseph Purugganan of Focus on the Global South Philippines highlighted growing competition for critical minerals in the ASEAN region. These minerals are an important component in the development of clean energy technologies.
According to him, ASEAN countries need policy space to develop domestic processing and downstream industries for critical minerals. Such policy space is considered essential for countries to capture the economic benefits of the energy transition while simultaneously building domestic green industries.
Currently, the investment chapter of RCEP does not include an ISDS mechanism. However, provisions allowing for negotiations within two years after the agreement enters into force create the possibility that the mechanism could be discussed as part of the RCEP General Review scheduled to begin in 2027.
Coordinator of the Indonesian Economic Justice Coalition (MKE), Olisias Gultom, called on the government to safeguard the public interest and preserve national policy space throughout the process.
Civil society groups have also called for ISDS not to be included in RCEP and for the mechanism to be removed from other investment agreements that are considered capable of constraining government authority.
Yulo A. Lao Jr., a representative of Public Services International (PSI) Asia Pacific, added that trade and investment policies must continue to prioritize democracy, workers, and public services.
Civil society groups hope that RCEP member-state governments will preserve national policy space to implement an energy transition that is just, sustainable, and affordable, including in addressing the challenges of climate change and reducing dependence on fossil fuels.
Source: Warta Ekonomi. Read the original article