AI Governance: A Comparative Economic Analysis of Japanese and Indonesian AI Regulation

The rapid development of Artificial Intelligence (AI) technology has prompted global discourse on the need for a robust regulatory framework that addresses ethical, legal, and social issues and fosters the innovation through the efficiencies created by AI. This research conducts a comparative analysis of the AI governance frameworks in Japan and Indonesia, examined through the theoretical lens of Economic Analysis of Law (EAL). Japan has taken a nuanced approach that balances the dynamic development of AI with ethical oversight to uphold the Human-Centered AI Social Principles. Indonesia is in the formative stages of developing its AI regulatory environment. Through EAL, this research assesses the efficiency implications of the AI regulatory frameworks between Japan and Indonesia, looking at the implementation of AI in society. By comparing these approaches, this paper highlights the challenges and opportunities for Indonesia in regulating AI technology for the public interest. Indonesia is advised to take a multi-stakeholder approach to build consensus and engage in bilateral cooperation with Japan for the establishment of domestic legislation. Keywords: Artificial Intelligence; Efficiency; Legislation.