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The cost of uncertainty
It is important that the government speed up economic reforms, but in doing so it needs to ensure transparency to provide certainty.
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Coordinating Economic Minister Airlangga Hartarto (center) talks with reporters after submitting presidential letter and omnibus bill on job creation to the House of Representatives in Jakarta on Wednesday, Feb. 12, 2020. (JP/Adrian Wail Akhlas)
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fter weeks of delays, the government finally submitted on Wednesday the omnibus bill on job creation to the House of Representatives. However, the submission of the much-awaited draft bill has not provided a sense of certainty to the general public, particularly business players who need it the most to calculate their future investments.
The omnibus bill on job creation is one of two umbrella draft bills intended to address impediments to investment. The other omnibus bill concerns taxation.
To make matters worse, neither of the two draft omnibus bills, which are intended to improve the ease of doing business, have been made available to the public. This has raised concerns around transparency and created uncertainties, as businesses speculate about which rules will remain in place and which will be amended by the bills.
After Indonesia’s economic growth slumped to a three-year low of 5.02 percent amid a global economic slowdown, expectations are high the government’s sweeping economic regulatory reforms will attract investment and create jobs in Southeast Asia’s largest economy.
However, even though the omnibus bills on taxation and job creation have been delivered to the House for deliberation, they have not been made available for public scrutiny, a vital element of the lawmaking process in a democracy.
President Joko “Jokowi” Widodo initially targeted to submit the omnibus bills to the House before the end of January, but the bill on taxation was filed only last week.
Labor groups have staged protests against the controversial bill on job creation, which they believe will have detrimental effects on labor rights, and the perceived lack of transparency in its drafting, although labor union figures were reportedly involved in the process.
To accommodate a broad range of perspectives and voices in the drafting of the job creation omnibus bill, the Office of the Coordinating Economic Minister formed a consultative team consisting of government officials, private sector representatives and labor groups. The team’s discussions will run in parallel to the House’s deliberations, as the government expects to expedite the process while allowing for public scrutiny.
While this development is a sign of progress, the two major labor groups in strongest opposition to the bill — the All-Indonesia Workers Union Confederation (KSPSI) and the Confederation of Indonesian Trade Unions (KSPI), whose leaders are known for their affiliations with major political parties in the ruling coalition — rallied outside the House on Wednesday.
Opposition to the bill has been based on an unofficial draft, which covers the most contentious issues, like severance pay and remuneration.
It is important that the government speed up economic reforms, but in doing so it needs to ensure transparency to provide certainty.
An action as simple as providing access to the bills for public scrutiny would be a good start. After all, these omnibus bills will affect the livelihoods of many businesses, workers and all taxpayers in the country.
No backroom dealing can be tolerated.
