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JAKARTA: Experts have cast doubt on Indonesia’s recently passed bus law, raising concerns about whether it can effectively create jobs and attract investment, while bureaucratic reforms are not addressed.
The Employment Creation Law reviews more than 70 existing laws and regulations and promises to simplify business permits and land acquisition processes, as well as ease foreign ownership requirements.
But experts and trade unionists worry that this will come at the cost of workers’ rights, as the law changes the way minimum wages are set and labor disputes are resolved.
Activists have also raised concerns about how the law ignores the Environmental Impact Analysis requirement, which was previously necessary before factories could operate. Under the new law, only “high-risk business activities,” such as mining, would require such an analysis.
The law was passed on Monday night (October 5), a day before millions of workers were supposed to hold a three-day strike to oppose it. Originally, the bill was planned to be deliberated by Members of Parliament (MP) on Thursday.
A man stands in front of an information panel with job seekers and rental houses in the Kemang district of Jakarta, Indonesia. (Photo: REUTERS / Beawiharta)
In his speech in parliament after the bill was signed into law on Monday, Coordinating Minister for Economic Affairs Airlangga Hartarto said the law was necessary to create jobs lost to the pandemic and improve Indonesia’s business climate. , which lags behind other Southeast Asian countries like Thailand. and Vietnam.
But Bhima Yudhistira Adhinegara, an economist at the Institute for Economic and Finance Development, expressed doubts about whether the new law would boost investment in Indonesia.
“Indonesia is a big market and raw materials are readily available here. But many companies are not moving to Indonesia, “he told CNA.
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“The government assumes that Indonesia’s biggest obstacle in terms of competitiveness is labor costs. But there are problems like rampant corruption, complicated bureaucracy and high logistics costs that the government must address, “he said, adding that these were not addressed in the omnibus law.
The economist said the law would only pave the way for discontent and more labor strikes, lowering worker productivity and could even lead to riots.
“Many large companies and brands are under pressure from the international community and consumers to use fair labor practices. Indonesia, with its omnibus bill, is taking a different path. These brands will look for other countries with good labor laws, ”he said.
A worker sweeps the interior of the construction site of the Walini tunnel for the Jakarta-Bandung high-speed railway in West Bandung Regency, West Java Province, Indonesia, February 21, 2019 (Photo: Reuters / Willy Kurniawan).
Mdm Hendri Saparini of the Indonesian Center for Economic Reform said the law would not be effective without efforts to reform government ministries and agencies.
“I don’t see any attempt to fix the bureaucratic structure, address the overlapping of authorities and improve coordination between the central and regional governments. Without this bureaucratic reform, the law only works on paper ”.
The World Bank’s country director in Indonesia, Satu Kahkonen, also expressed concern about the new law in July, while it was still being deliberated by parliament, saying it could negatively affect labor rights and “move Indonesia’s environmental legislation away from the implementation of best practices. “
THE RESULTS WILL NOT BE IMMEDIATE: TEACHER
President Joko Widodo has long championed the law, which he sees as a solution to Indonesia’s slow economic growth. According to the World Bank’s Doing Business 2020 report, Indonesia ranks 73rd out of 190 countries for ease of doing business.
The law also comes at a time when the country’s economy contracted by 5.32 percent between April and June this year due to the continued spread of COVID-19 in Indonesia.
The president of the Indonesian Chamber of Commerce, Rosan Roeslani, welcomed the new law, adding that he expected to see a 6.6% to 7% increase in investment every year.
“The law is the answer to a multitude of problems that hinder investment and job creation through the simplification of bureaucracy and the acquisition of licenses, the ease of doing business and a strong investment ecosystem,” said Roeslani in a statement.
Ari Kuncoro, professor of economics and rector of the University of Indonesia, told CNA that the law offers some solutions to the legal uncertainties that have deterred investors from doing business in Indonesia.
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“The law promises to harmonize the plethora of overlapping and sometimes contradictory laws and regulations. However, putting the new law into practice will not be easy, ”Kuncoro said.
“The government still needs to adjust hundreds of ministerial and regional regulations and decrees. It could be three to four years before Indonesia starts to see more investors as a result of the new law. The law is good, but it all depends on how well the government can implement it. “
DRAMA WITHIN PARLIAMENT
The passage of the law on Monday night was marred by strikes and disruptions by parliamentarians, as two of the nine parties, the Democratic Party and the Prosperous Justice Party (both are opposition), opposed to the approval of the law.
“We appreciate the government’s good intention to improve Indonesia’s investment climate, simplify bureaucracy and create jobs,” said Mr. Marwan Cik Asan of the Democratic Party at a plenary hearing in parliament.
“However, the law in its current state has the potential to harm the environment, the rights of workers and society as a whole. Only investors can benefit from the law. There are too many issues that need to be discussed before the bill becomes law. “
The Democratic Party tried to prevent the bill from becoming law and made a motion for further deliberation.
Legislators of the Indonesian House of Representatives at the Parliament building in Jakarta. (Photo: AFP / ROMEO GACAD)
But the deputy speaker of parliament Azis Syamsuddin of the Golkar Party (a member of the government coalition) rejected the motion saying that the majority of the parliament had expressed support for the bill becoming law.
Members of the Democratic Party left the session in protest.
NATIONAL STRIKE
At least 32 unions said they would organize a nationwide strike from Tuesday to Thursday, including the largest union group Confederation of Indonesian Workers’ Unions (KSPI) that claims to have two million members.
Since Monday morning, police have deployed thousands of officers to Jakarta’s border areas to prevent workers working in the industrial areas surrounding the city from entering the capital and holding protests.
Due to strong security, the workers were forced to hold protests outside their respective factories on Tuesday.
“We will not send workers to protest in Jakarta. Our members are simply told to strike and protest in front of their factories, ”KSPI president Said Iqbal told Indonesian media.
The Indonesian Workers Union Alliance (KASBI) also told local media that its members at the national level would hold demonstrations in front of their respective local government offices instead of sending representatives to Jakarta.
In the city of Bandung, West Java, hundreds of protesters took to the streets in front of the Rancaekek industrial zone and paraded on foot and on motorcycles to the city hall, 20 kilometers away.
Similar protests were also observed in the city of Yogyakarta and Surabaya.
