The rank of Global Innovation Index (GII) Indonesia was decreasing from 2007 to 2018. The detail data of GII shows that the regulatory environment – especially quality of regulatory – was not promote the development, the diffusion, and the use of innovation. The research question is “why the regulatory environment of Indonesia was not appropriate to be a framework for development of innovation?”. This research aims to identify the basic regulation of innovation and to analyze the basic problem of the regulation to promote innovation. This research employs a research method that aims to generate findings towards understanding. Based on characteristics of the research objectives, the appropriate form of qualitative research is a case study with an interactive model analysis technique. Data were collected through literature and documented studies. The research findings indicate there are four major regulation which closely tied to development of innovation in Indonesia, namely UU No. 18 Tahun 2002 tentang Sistem Nasional Penelitian, Pengembangan, dan Penerapan Ilmu Pengetahuan dan Teknologi; UU 25 Tahun 2004 tentang Sistem Perencanaan Pembangunan Nasional (SPPN) dan UU No. 17 Tahun 2007 tentang Rencana Pembangunan Jangka Panjang Nasional (RPJPN); UU No. 5 Tahun 2009 tentang Pelayanan Publik, and UU No. 23 Tahun 2014 tentang Pemerintahan Daerah. The analysis indicate at least there are three basic problems related to innovation policies, which are: (a) less understanding of the innovation perspective and the national innovation system concept, (b) the less coherency of innovation policies in the long term and midterm national planning, and (c) there are no institution – which have the strong legal authority – to conduct the implementation of all the programs and activities of the national innovation system.

Keywords : Regulatory Environment, Innovation Perspective, National Innovation System.