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Jakarta Post

House passes Perppu on COVID-19 response amid concerns of embezzlement

  • Ghina Ghaliya
    Ghina Ghaliya

    The Jakarta Post

Jakarta   /   Tue, May 12, 2020   /   07:41 pm
House passes Perppu on COVID-19 response amid concerns of embezzlement House of Representatives Speaker Puan Maharani (center) receives the presidential letter on Regulation in Liew of Law (Perppu) No. 1/2020 on the COVID-19 response from Finance Minister Sri Mulyani Indrawati (left) in a meeting at the House compound in Jakarta on April 2. (Antara/Raqilla)

The House of Representatives has passed an executive order that will expand the government's authority to allocate emergency coronavirus spending despite mounting public pressure to drop the regulation due to concerns of budget misappropriation and embezzlement.

Regulation in Lieu of Law (Perppu) No. 1/2020 allows the government to extend the state budget deficit beyond the normal 3-percent-of-GDP limit and allocate extra spending to the COVID-19 response, while protecting officials from any legal charges as long as they act "in good faith and according to the law".

"Eight political party factions have agreed [to pass the regulation], while one faction, the PKS [Prosperous Justice Party] raised objections," House Speaker Puan Maharani said at the House's plenary session on Tuesday.

Under the Perppu the central government is allowed to allocate more funds for coronavirus aid in this year's state budget through a presidential regulation (Perpres), which does not require House approval.

The government seeks to disburse Rp 405.1 trillion (US$24.6 billion) for COVID-19 measures, most of which would be allocated to support the economic recovery rather than health care.

Finance Minister Sri Mulyani Indrawati said in the plenary session that, in such a critical situation, all countries in the world should take extraordinary measures in accordance with their fiscal capabilities.

Read also: Indonesia will emerge out of pandemic highly indebted. Every rupiah counts

"Countries that are fiscally prudent are now forced to widen their deficits," Sri Mulyani said, adding that the government would maintain a debt-to-GDP ratio of below 60 percent.

Two party factions from the government coalition, the Indonesian Democratic Party of Struggle (PDI-P) and the Gerindra Party, previously voiced objections to the executive order, saying that it infringed the House's right to deliberate the state budget and gave officials excessive power over the matter.

However, both factions eventually agreed to endorse the Perppu in Tuesday’s plenary session following a House budget committee hearing with Sri Mulyani on May 4, in which lawmakers and the government agreed to pass the 2021 and 2022 state budgets through the normal process, not through a Perpres as in the case of the revised 2020 budget.

The Perppu, however, has prompted a chorus of criticism from activists and civil society groups lambasting what they deem an absence of government oversight in the regulation that might lead to corruption.

The objections revolve particularly around Article 27 of the regulation, which stipulates that the funds spent by the government to counter the economic impacts of the pandemic are considered to be "economic costs" rather than state losses. 

The article also shields officials responsible for fiscal and monetary policies from any legal charges behind the argument that they have acted in good faith.

The Center for Constitutional Law at the Faculty of Law, University of Indonesia (PSHTN FHUI), noted that the regulation had the potential to restore excessive power for the president, citing Article 12 of the Perppu that allows the state budget to be determined through a Perpres.

Read also: COVID-19: Govt to allow people under 45 to work outside to prevent more layoffs

“Such [provisions] will certainly give the president space to have absolute power in the state budget without the House’s approval" PSHTN FHUI chairman Mustafa Fakhri said.

The Constitutional Court is currently reviewing the controversial provisions in the Perppu under a petition filed by a group of anticorruption activists, who argued that Article 27 violated the 1945 Constitution and several prevailing laws, including the 2003 law on state finances and the 2006 law on the Supreme Audit Agency.

Boyamin Saiman from the Indonesian Anticorruption Community (MAKI), one of the plaintiffs challenging the Perppu, said they would immediately withdraw their petition from the Constitutional Court and submit a new one to demand that the court scrap Article 27.

"We are happy that the House has passed the Perppu into law. Our petition will be more solid, because we are now facing two parties, the government and the House," he said.

Law and Human Rights Minister Yasonna Laoly, however, asserted on Tuesday that the Perppu would not give officials impunity from graft charges if any of them were found to have committed corruption, saying that Article 27 only meant to ensure that the government could make swift decisions during the health crisis.

"Corruption at the time of a disaster can be punished with the death sentence,” Yasonna said, citing a provision of the 2001 Corruption Law that stipulates that those committing corruption or self-enrichment that cause state losses during a national disaster may face capital punishment.