The Muhammadiyah is a 30 million-strong religious and social association in Indonesia seeking to challenge a series of laws that regulate the government's ability to contract to third parties the use and development of natural resources.

Last week, Muhammadiyah filed three actions seeking judicial review to overturn the 1999 Foreign Exchange Law, the 2007 law on Investment and the 2009 Electricity Law.

The group has also claimed an additional 100 laws may violate Article 33 of the Indonesian Constitution, which states that natural resources shall be under the powers of the state and for the good of the people.

Muhammadiyah has already seen some success in overturning resources-related laws – including recently overturning a law concerning the right of the government to contract to the private sector the use of water rights, which is currently being appealed.

Indonesia is perhaps the most diverse nation on earth – with an estimated 700 languages and 250 million citizens spread across over 8000 inhabited islands. Home to the largest population of Muslims, the country also has significant Hindu populations (in Bali), Christian populations (largely in the eastern Islands) and a variety of indigenous animist religions.

The country is in many respects a model of accommodation of diversity. Indeed its national motto Bhinneka Tunggal Ika – unity in diversity – is a fitting rallying cry for this rapidly growing neighbour.

Governing Indonesia, however, is anything but easy. Accommodating the various regions, religious and ethnic groups to achieve peace and harmony is a challenge in the best of times.

The opacity in which the judicial process operates, including with respect to the Bali nine, may in fact be a sign of necessity in managing the complexity of such a diverse social and political environment.

So, when one of the country's largest groups, Muhammadiyah, makes an aggressive challenge against the current legal foundation of investment and commercial activity in the country, outsiders should be wary that the balance of power, and the stability of the legal regime, could be under real threat.

The human rights of the Bali nine are certainly worthy of attention, but a movement which could undermine international investment and economic stability, possibly affecting the jump out of poverty of millions of people, may be a cause for even greater concern.

Potential foreign investment restrictions

Australia's strong rebuke of the treatment of the Bali nine reflects our strong condemnation of what might appear to be an arbitrary use of capital punishment.

We must not lose sight, however, of a potential far greater threat – by social and religious movements, which seek to end the right of the government to attract foreign investment and license major project development.

Internal political movements against intervention by foreign powers may be strengthened by a perception that Australia has played a very heavy hand with respect to what many may view as an internal matter of the courts and criminal system.

Infrastructure investments – from oil and gas, mining, power and roads, among other sectors – all could be at risk if Muhammadiyah is successful.

Our retreat from engagement with the country, including recalling our ambassador, may weaken our ability to support the factions within President Joko Widodo’s government, which are seeking to maintain and promote legal stability, attract investment and lift millions out of poverty.

With strong investment, healthcare and education improve, leading to a more active and informed population, which may, over time, share sympathy with Australia's views of human rights.

Now, more than ever, it is important we recognise the multifaceted nature of our relationship with Indonesia, the challenges of its government in maintaining peace and harmony and the importance of supporting the president’s efforts to reform and develop his country, turning Indonesia into a true partner and equal in the search for protecting human rights not only in the Indonesian archipelago, but across Asia.

Robert Milbourne is an adjunct professor at the TC Beirne School of Law, and a partner of the international law firm K&L Gates, where he focuses on cross-border investments in the natural resources sector.