POLITICAL CONFLICT AND INVESTMENT INFLOWS INTO ACEH PROVINCE OF INDONESIA

This paper aims to scrutinize a correlation between political conflict and investment inflows into Aceh Province. In conducting this study, researcher applied qualitative research method by relying on ssecondary data. These were obtained through library research by analyzing relevant documents, government reports, case studies and current literature. The results indicate that investment inflows into Aceh Province during political conflict period between the Free Aceh Movement and Indonesia central ggovernment were totally low due to unsecured condition that occur in this province. Unsecured political condition made investors feel reluctant to invest their capital in this province because they do not want to lose their capital by investing in high risk investment area. Therefore, during this political conflict period (1976-2005) Aceh was not considered as one of investment destinations in Indonesia. Fortunately, better investment condition in Aceh is achieved after Indonesian central government and the Free Aceh Movement agreed to seek a peaceful conflict resolution through a peaceful agreement which was signed by both parties on 15th August 2005 in Helsinki. Since that time the amount of investment inflows into Aceh has signficantly increased due to stable political condition. It is suggested that the government should maintain stable political condition to attract more investment inflows into Aceh Province in the future.