Omnibus Bill to amend 82 laws . . .
The Government of Indonesia has submitted a 1,028-page draft of the Omnibus Bill, which highlights employment opportunities and proposes to amend 2,000 articles and 82 laws. Indonesia has consistently underperformed on indicators such as ease of doing business, undermining its foreign investment attraction. By amending employment, environmental, and investment laws, the reforms announced in last week’s bill seek to boost the economy and employment and avoid the ‘middle income trap’ common to developing economies. Finance Minister Mulyani Indrawati estimates that the Indonesian economy needs to grow at 6 per cent to escape the middle income trap.
The Omnibus Bill has its detractors . . .
The Omnibus Bill faces broad resistance in Indonesia. First, the Bill will roll back the Local Autonomy Law, which provides local governments with jurisdiction to make their own laws on a wide variety of issues, and recentralize power in Jakarta. This has been perceived as a threat to democracy. Second, the Bill proposes to amend an array of employment regulations that would erode labour rights, particularly around remuneration and job security. That has sparked protests from labour groups claiming that investment promotion should not come at the cost of workers. Third, environmental experts have warned that the de-regulations included in the Bill could have a devastating impact on the environment. Precisely, the bill will revoke 39 articles on environmental permits.
A long way from the finish line . . .
The broad implications of the Omnibus Bill could define President Joko Widodo's, also known as Jokowi, second term as president. While it will no doubt have damaging effects, the president will ultimately be judged on the Bill’s ability to boost investment and the economy. The government aims to pass the bill within the next six months, but pundits say it could take much longer due to its scope and the passivity of Indonesian lawmakers. The Bill may also be pushed back by the House of Representatives as politicians from Jokowi’s party (PDI-P) have already rejected its amendments to labour laws. To pass the bill, the government will be relying on support from the Indonesian Economic Coordinating Minister’s Golkar Party members.