Warta Ekonomi, Jakarta – Civil society groups in Southeast Asia are calling on the governments of the Regional Comprehensive Economic Partnership (RCEP) member states to maintain the exclusion of the Investor-State Dispute Settlement (ISDS) mechanism in the RCEP General Review, warning that its inclusion would undermine the public interest and hinder a just energy transition.
More than 70 civil society organizations have so far signed a joint statement opposing the inclusion of ISDS in the RCEP General Review.
The statement was delivered during a public forum on “Challenges of a Just Energy Transition in International Trade and Investment Agreements,” held on August 12 at the Faculty of Law, University of Indonesia (UI). It also served as a response to the 14th RCEP Joint Committee Meeting, held on August 11–12 in Manila, Philippines.
The RCEP General Review is scheduled to begin in 2027, and the RCEP Joint Committee meeting will finalize the scope of the review, including enhancements to existing provisions aimed at facilitating supply chain resilience and green trade.
Global uncertainty has positioned ASEAN as a target for investment in global energy supply chains, given the region’s abundant reserves of key raw materials for clean energy technologies, particularly for major external partners such as China, Japan, and South Korea.
As a result, RCEP cooperation could pave the way for expanded investment that is likely to intensify resource extraction and energy privatization.
Rachmi Hertanti, a researcher at the Transnational Institute, explained that including ISDS in the RCEP would only exacerbate inequality by granting special rights and extensive protections to multinational corporations benefiting from the expansion of energy transition projects in the region.
“Billion-dollar claims hinder the realization of a just energy transition because of potential compensation for investor losses and its impact on governments’ fiscal capacity. ISDS claims have become a direct challenge to governments’ ability to take climate action, including fulfilling national net-zero commitments, exercising sovereignty over natural resources, protecting the environment, ensuring public access to affordable energy, and maintaining fiscal capacity to finance the transition,” she said in Jakarta on Wednesday (12 August 2026).
Furthermore, when examining energy transition cases to estimate the costs that governments could potentially have to bear—as a percentage of the total funding required for the energy transition in each country—Australia and the Philippines are among the countries facing the greatest risks.
ISDS claims brought by mining, oil, and gas companies pose serious risks to public budgets and climate financing, given that compensation awards in such cases can reach as much as 11.5% of national GDP, as occurred in the ConocoPhillips v. Venezuela dispute.
“ISDS compensation awards directly threaten governments’ ability to manage public finances in the interests of their people: worsening fiscal deficits, undermining debt sustainability, and diverting limited financial resources toward meeting these claims instead of addressing environmental challenges and fulfilling commitments under the Sustainable Development Goals (SDGs),” said Chien Yen Goh of the Third World Network.
Currently, the RCEP investment chapter does not include ISDS. However, the agreement contains a commitment to “commence discussions” on ISDS within two years after the RCEP enters into force. A decision on whether and how to adopt an ISDS mechanism is now expected around 2027.
Olisias Gultom, Coordinator of the Indonesian Economic Justice Coalition (MKE), explained that RCEP and AANZFTA have been in force for several years, and the global and national contexts have changed significantly during that time. Therefore, economic justice for communities must remain a core pillar, upheld and prioritized above corporate profit-seeking interests.
“The Investor-State Dispute Settlement (ISDS) mechanism must be halted and removed from RCEP and AANZFTA, because Indonesia and Australia in particular have proven overwhelmed in addressing these challenges,” he said.
According to him, efforts to meet net-zero commitments and phase out coal have created risks of ISDS claims. Around 257 coal-fired power plants worldwide still have economically viable operating lifetimes and face risks associated with foreign ownership, with 75% (192 plants) protected by at least one ISDS agreement.
Within the RCEP region, this includes 88% of foreign-owned coal-fired power plants in Indonesia, 71% in China, 85% in Vietnam, 30% in the Philippines, and 86% in Australia.
Meliana Lumbantoruan, Deputy Director of Publish What You Pay (PWYP) Indonesia, explained that as Indonesia navigates the complex transition away from coal and seeks to fulfill its net-zero commitment, the government cannot allow ISDS to become a silent veto over climate policy.
With 88% of Indonesia’s foreign-owned coal capacity already covered by investment agreements, any sovereign decision to restrict coal operations, strengthen emissions standards, or pursue a managed phase-out could expose the government to costly investor claims and hidden legal bills that could ultimately be borne by the public budget.
A truly just energy transition must not force governments to pay twice: first to finance the shift to clean energy, and again to compensate fossil fuel investors for stranded assets. The public has the right to understand these potential costs before RCEP governments decide the future of ISDS.
“Therefore, the RCEP General Review must not reopen the door to ISDS. Indonesia must preserve its policy space to phase out coal, protect public finances, and invest in a just energy transition,” she said.
Source: Warta Ekonomi