Encourage Judicial Reform To Achieve Economic Growth Targets

JAKARTA The judicial reform is still in the spotlight of the Indonesian people. In fact, in the midst of the 8 percent economic growth target set by President Prabowo Subianto's government, judicial reforms can be one of the important factors.

This is because the fast, cheap, and simple justice system not only increases the efficiency of dispute resolution, but also encourages more parties to take advantage of legal channels when investing or carrying out other economic activities.

According to Indonesian Law observer Sebastian Pompe, judicial efficiency plays an important role in supporting economic growth, considering that the relationship between law and economy greatly determines the investment climate and business development in a country.

Law and economy as discipline have developed since the 1960s and 1970s, especially through economists' studies. According to him, economic growth is not only determined by industrial innovation, but also requires strong and efficient legal institutions.

"So, the basis of law and economy is that economic development is not only produced by industrial innovation, but also requires institutions and laws to produce that development," said Pompe.

One of the important aspects discussed is efficiency in the legal system related to transaction fees. Pompe explained that transaction costs cover various factors such as case settlement time, lawyer fees, and court decision speed.

He referred to various studies showing that countries with efficient justice systems experienced higher economic growth than countries with sluggish justice systems. Studies from the World Bank, for example, show that countries with faster and more efficient courts experienced an increase in economic growth of around 1.4 to 1.8 percent.

"Efficiency in laws and the economy is called transaction cost, the cost of a transaction. So, if someone buys a car from me and we have a dispute, we go to court, how long does it take, how much is the cost, how is the move, there are costs. The delays, which are costs too, that's the transaction cost," he added.

Pompe gave an example, in the United States, judicial efficiency reforms between 1993 and 2013 caused the surge in the number of law enforcement cases from 1.7 million to 4.6 million. This shows that the lower transaction costs in court, the higher public access to justice and economic competitiveness in a country.

He also highlighted how simple transactions, such as unsecured debt, are not resolved through judicial channels properly. In fact, in many other countries, unsecured debt cases have a clearer definition and are handled with a more structured system.

He revealed, in countries such as Austria, Estonia, Germany, Poland, and Portugal, simple cases include the majority of civil cases that go to court. In Austria, 83 percent of civil cases are simple cases. In Germany, the number of simple cases is even more than the United States, reaching five million cases per year,' added Pompe.

However, this situation is very different in Indonesia where the number of simple cases that go to court is very minimal, even though transactions such as credit card debts, electricity bills, and telecommunications should be able to fall into that category. In Indonesia, these cases are completely out of court," he said.

Informal Line Is More Of A Choice Than A Court

Pompe menjelaskan bahwa di banyak negara, perusahaan-usahaan besar yang memiliki ratusan ribu pelanggan dapat mengajukan klaim massal ke pengadilan dengan sistem yang efisien. Setiap dua minggu, perusahaan-usahaan ini mengajukan 10.000 hingga 20,000 perkara utang dalam satu berkas digital ke pengadilan, lalu pengadilan menyediaskannya secara internal dan mengirimkan putusan.

Meanwhile, in Indonesia, these cases tend not to go to court and are resolved through informal channels or absorbed by other mechanisms, such as through police, beaters, or family relations. As a result, many companies hesitate to provide credit due to weak legal certainty in dispute resolution.

He stated that the impact of this inefficient justice system was clearly seen in credit access in Indonesia. Compared to Malaysia, which has 33,000 cases of mortgage execution per year, in Indonesia there are only 605 cases. Is 605 a lot or a little? When compared to Indonesia's economic measure, it's very small," said Pompe.

Consequently, he said, banks in Indonesia are reluctant to provide loans because of the difficulty of legal execution of problematic credit. As a result, interest rates in Indonesia are higher because banks must take into account the risk of default in interest calculations.

He gave an example of how the pace of mortgage execution affects banking policies in providing loans. In countries with slow mortgage execution systems, banks tend to provide loans with small amounts and high interest due to high risk of default. On the other hand, in countries with a fast execution system, banks can lend up to 90-95 percent of property value with lower interest rates.

In Malaysia, because the mortgage execution system is more efficient, the loan interest is lower. On the other hand, in Indonesia, the difficulty of execution makes interest higher. In Indonesia, it is more difficult to get mortgages than in Malaysia, the Philippines, China, or Singapore. The loan capacity in Indonesia is much smaller than those countries," he explained.

Pompe emphasized that reforms in the justice system are needed to encourage economic growth. According to him, an efficient trial is not only a matter of law, but also a fundamental factor in economic development.

Indonesia must have hundreds of thousands of simple cases that go to court, because these cases must exist. If the justice system is more efficient, then trust in credit will increase and the economy can develop more rapidly," he concluded.

The Supreme Court's Strategic Plan To Continue Judicial Reform

A spokesman for the Supreme Court, Prof. Yanto, explained that judicial reform cannot run without clear directions and plans. Therefore, the Supreme Court has prepared a Strategic Plan (Renstra) 2025-2029 as the main stepping stone in continuing sustainable and responsive judicial reforms to the needs of the community.

This extra, prepared not only as a formal document, but also as a moral compass and the operations of judicial institutions in facing various challenges in the modern era. The main focus includes improving the quality of judicial services, strengthening the integrity of the apparatus, and utilizing information technology to the fullest.

The three of them are important pillars in building judiciary institutions that are not only professional but also competitive and reliable. Improvement of service quality is also a top priority. This concerns how courts are able to provide fast, simple, and affordable legal services for the community," he said.

Therefore, the Supreme Court encourages all judicial work units to strengthen the function of public services, accelerate case settlement time, and ensure transparency in every legal process. This approach is expected to increase the satisfaction of the justice seeker community and reduce the distance between the judiciary and the people.

On the other hand, strengthening integrity is the key to change. The Supreme Court continues to uphold the principle of "zero tolerance" against the practice of deviation and violation of the code of ethics. Judiciary officials are required not only to be smart in law, but also to be honest and fair in carrying out their duties. Without integrity, all reforms will only be a formality without meaning. Renstra also directs the strengthening of a more effective internal surveillance system to minimize potential abuse of authority and maintain institutional credibility," Yanto added.

He emphasized that through the 2025 '2029 Strategic Plan, the Supreme Court showed that commitment to improvement never recedes. Instead, it is further strengthened, sharpened, and carried out with full responsibility for the sake of upholding justice. "In the future, all judicial personnel are required to become agents of change who are able to bring the judiciary to a better, clean, and professional direction for a just and dignified justice," he said.