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Jakarta Post

Businesses push for acceleration of omnibus bill deliberations despite concerns

  • Adrian Wail Akhlas and Ghina Ghaliya

    The Jakarta Post

Jakarta   /   Fri, July 17, 2020   /   07:46 am
Businesses push for acceleration of omnibus bill deliberations despite concerns Coordinating Economic Minister Airlangga Hartarto (center) talks with reporters after submitting a presidential letter and the omnibus bill on job creation to the House of Representatives in Jakarta on Feb. 12. (JP/Adrian Wail Akhlas)

Businesspeople are pushing the government and the House of Representatives to accelerate deliberation of the omnibus bill on job creation, saying the bill – if passed into law – would help businesses to stay afloat during the coronavirus-induced economic downturn.

Indonesian Chamber of Commerce and Industry (Kadin) deputy chairwoman Shinta Kamdani said the bill would be able to boost the country’s competitiveness, adding that it would create much-needed jobs after around 6.4 million workers were laid off or furloughed during the coronavirus pandemic.

“The COVID-19 pandemic has made the bill even more relevant and essential to support economic recovery,” Shinta told The Jakarta Post in a phone interview on Wednesday. “We need structural reform and a greater amount of investment to offset the job losses caused by the pandemic.”

Some 5.5 million people may lose their jobs this year, raising the total number of unemployed people to 12.7 million, according to an estimate by the National Development Planning Ministry.

The omnibus bill seeks to revise 79 prevailing laws and more than 1,200 articles from labor and mining regulations to business license and environmental laws, among other things, to cut red-tape and attract investment to the country.

President Joko “Jokowi” Widodo’s administration is expecting the bill’s deliberation to finish by early September to swiftly improve ease of doing business in Indonesia and attract investment, thereby boosting job opportunities and economic growth in Southeast Asia’s largest economy.

Indonesia’s gross domestic product (GDP) is expected to shrink 0.4 percent this year in the worst case scenario, or grow only 1 percent in the baseline scenario as the coronavirus outbreak paralyzes business activity.

Indonesia has been a complex market for foreign investors to invest in, said British Chamber of Commerce (Britcham) Indonesia executive director Chris Wren, citing the many overlapping laws and regulations that made foreigners hold back their investment.

“Corporates around the world are planning to diversify their supply chain and production to reduce dependence on a single market [in China],” Wren went on to say. “The passage of the omnibus bill can place Indonesia in a very strong position to compete for these relocations.”

Wren said there had been continued interest in trade and investment with Indonesia, adding that simplification of regulatory structures could “accelerate that interest and land new investment” that would create long-term employment.

Seven foreign companies, including South Korean industrial conglomerate LG, have confirmed plans to relocate production facilities to Indonesia, which is expected to bring US$850 million to the country and potential employment for 30,000 workers.

However, several lawmakers at the House of Representatives Legislation Body (Baleg) said it would not be possible to pass the bill into law in a short time as the bill contained 15 chapters and 174 articles laid out in over 1,000 pages.

Baleg deputy chairman Willy Aditya of the NasDem Party told the Post recently that the body had yet to discuss several crucial chapters of the bill, such as those related to labor and environmental issues.

Reform on investment law to eliminate discrimination against foreign direct investment would bring capital inflow and create more jobs, while implementing a risk-based approach to export and import licensing would plug the country into the global value chains, World Bank lead economist for Indonesia Frederico Gil Sander said on Thursday.

“The omnibus bill has the potential to turbocharge economic recovery, but some reforms could be detrimental to the economy and some pitfalls should be avoided,” he said.

“But the bill also includes reforms that could be detrimental to the environment, health and safety and incomes of Indonesians – dropping them or modifying them will ensure the bill brings maximum benefits to everyone.”

Observers have criticized the stronger role of the central government in the bill while environmentalists have warned that less stringent environmental impact analyses and building permit requirements will result in unsustainable growth. Labor unions also reject the draft as they fear it will jeopardize labor rights.

“We joined the government’s technical team to provide protection for workers and their families, but they did not listen to us,” the Indonesian Worker Union Confederation (KSPI) president Said Iqbal told the Post. “We will now try to lobby lawmakers and will hold a nationwide protest with hundreds of thousands of workers in August.”