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Controversial bills threaten business climate, analysts warn
By distorting the incentives of policymakers and civil servants, corruption undermines the quality and effectiveness of government policies, says IMF.
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Hundreds of students in Bali carry banners during a protest about various issues, ranging from racism and forest fires to the revision of the Corruption Eradication Commission (KPK) Law on Sept. 24. They also protested against the Criminal Code revision bill. (JP/Zul Trio Anggono)
T
he controversial moves by the government and the House of Representatives to amend several laws have not only triggered protests by tens of thousands of students, who took the streets of Jakarta and other cities on Tuesday, but also threatens the country’s business climate amid President Joko “Jokowi” Widodo’s efforts to attract investment.
The students have protested against the recently passed revision of the Corruption Eradication Commission (KPK) Law, which they claim has effectively defanged the antigraft body. They have also demanded the government and the House halt the passage of several problematic bills, including the revision of the Criminal Code, which analysts have warned could severely limit freedom of expression and the right to privacy.
“While these proposed legislative amendments do not have a significant direct impact on the business environment in Indonesia, they are indicative of a more conservative social climate in Indonesia,” Fitch Solutions Asian country risk analyst Koh Hui Koon wrote in an emailed response to The Jakarta Post on Tuesday.
“This poses the risk of the business environment coming under pressure eventually, as it may be burdened with greater compliance costs over time,” he added.
Read also: Students lead the way, again
Jokowi, who will be sworn in for his second term next month, has been struggling to lure more foreign investment to the country in a bid to boost the sluggish economy amid slowing domestic consumer spending. Indonesia’s economy, the largest in Southeast Asia, grew 5.05 percent in the second quarter, its slowest pace in the last two years.
Investment, which accounts for around 30 percent of the country’s gross domestic product (GDP), expanded only 5.01 percent year-on-year in the same period.
