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Jobs law not enough to boost extractive industries, businesses say
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Heavy equipment owned by PT Berau Coal is used for coal mining activities at the Binungan mining site in East Kalimantan. (JP/Indra Harsaputra )
E
xtractive industry players have expressed doubt that the recently passed Job Creation Law will be quick to solve issues hindering the sector’s growth despite hopes over deregulation and potential future investments offered through the legislation.
The omnibus law simplifies administrative-related articles from 79 older laws in various sectors, including oil and gas, mining and geothermal laws, in the hopes of growing businesses and generating employment.
Three extractive industry association leaders have said that, while cutting red tape is important to attract investment, the law failed to address many other critical issues, including the most immediate one: the COVID-19 pandemic.
“This [law] is not going to immediately boost upstream oil and gas activity. If anything, activity will continue going down because of COVID-19 and low oil prices,” Indonesian Oil and Gas Companies Association (Aspermigas) chairman John Karamoy told the Jakarta Post on Thursday.
“Once those issues are solved, we can talk about land and permit acquisitions, but even then, whether or not the law will increase investment remains an open question,” he said, adding that Indonesia’s thinning oil and gas reserves were another long-term challenge.
Oil and gas attract the biggest investments among three extractive industries. Before the coronavirus outbreak struck, Indonesia projected oil and gas investment to reach US$13.8 billion this year, dwarfing that of mining ($7.8 million) and geothermal energy ($1.5 billion).
The omnibus law is the government’s big gun in its plan to maximize Indonesia’s extractive industries, which help form the country’s backbone for trade and nontax state revenue (PNBP).
