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Omnibus bill allows President to scrap bylaws
An omnibus bill on job creation will grant the President the authority to revoke regional bylaws that contradict the central government’s regulations, effectively weakening the influence of local administrations but resolving business people’s complaints about conflicting rules
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span>An omnibus bill on job creation will grant the President the authority to revoke regional bylaws that contradict the central government’s regulations, effectively weakening the influence of local administrations but resolving business people’s complaints about conflicting rules.
The bill will also streamline the licensing process in almost all strategic business sectors, namely mining, energy, agriculture, aviation and construction, under the government.
According to a draft of the bill obtained by The Jakarta Post, provincial and regency/city bylaws as well as gubernatorial and regental/mayoral regulations that contradict the government’s regulations will be revoked by presidential regulations.
The existing Regional Administration Law stipulates that the authority to revoke bylaws lies with the home minister.
The bill, submitted to the House of Representatives for deliberations on Wednesday, has also removed a provision in the prevailing law that enables regional administrations to appeal such revocations.
“This will harmonize government regulations and regional bylaws to ease the investment process,” Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman Raden Pardede told the Post over the phone on Friday.
Regional administrations, he went on to say, often hampered investment through their long and complicated licensing process.
“There are many cases in which the government had agreed on a private investment but regional bylaws hindered the process. Thus, investors were discouraged from coming into the country.”
The government has pinned its hopes on the omnibus bill on job creation to cut red tape and attract more investment to help jack up the country’s sluggish economic growth. Indonesia’s economy grew by 5.02 percent last year, slower than 5.17 percent in 2018, as growth of investment and export softened.
The World Bank previously stated that excessive government regulations were a major barrier to attracting investment.
Meanwhile, Jakarta-based think tank Regional Autonomy Watch’s (KPPOD) study of 1,109 regional business regulations issued by six administrations found that one-third of them contradicted equivalent central government rulings.
President Joko “Jokowi” Widodo urged regional administrations across the country in December to join the central government’s deregulation effort by drafting omnibus bylaws to cut through sprawling regional regulations that have deterred investors.
Such a move was necessary, he said, to prevent executives at both the central and regional levels from being held back by these regulations, which could comprise up to 42,000 rules.
“Cut down on [the regulations] so that you, ladies and gentlemen, can work faster [and] more flexibly amid changing national and global situations,” he told regional leaders in Jakarta.
Meanwhile, the omnibus bill also stipulates that regional administrations that continue to implement the revoked bylaws will face administrative sanctions and fiscal punishments. It also shifts the authority to issue building permits from local administrations to the central government.
The bill further requires regional administrations to set up a business licensing service using an electronic system managed by the central government.
“While I agree that there is a need to harmonize regulations between the government and local administrations, the government should not take over the regional administrations’ authority,” said KPPOD executive director Robert Endi Jaweng.
The government, however, does not have the authority to revoke bylaws as the authority lies with the Supreme Court, he added.
In 2017, the Constitutional Court prohibited the central government from annulling regional bylaws and instead gave the authority to the Supreme Court.
Center of Reform on Economics (CORE) Indonesia research director Piter Abdullah told the Post that the government’s previous economic policy packages to boost the economy had failed because of “excessive” bylaws.
“The country must admit that there are is too much overlapping bureaucracy,” Piter said. “Thus, we should start to organize all of these regulations.”
Regency Administrations Association (APKASI) secretary-general Najmul Akhyar, meanwhile, warned that the bill would further complicate the investment process as it involved several transfers of authority.
“This will kill regional autonomy,” he said as quoted by Kontan.
