On October 5th, Indonesia passed President Joko Widodo’s flagship “job creation” bill. Seven out of nine Parliament parties voted to approve the omnibus, which, according to the New York Times, will slash labor and environmental regulations contained in 80 separate laws.
Indonesia is the world’s fourth most populous country, and one of the hardest hit by the pandemic. As of October 31st, the country has had 410,000 cases and 13,869 deaths, Reuters reports.
Indonesia’s economy is also the largest in Southeast Asia, according to the World Bank. However, the Bank projects that it will contract by 1.6 percent this year, the first time Indonesia’s economy will have contracted since the Asian Financial Crisis in 1997. In September, the Bank predicted that the Indonesian economy could even contract by two percent if the Indonesian government fails to curb the coronavirus’s spread and effects. Widodo’s omnibus bill is aimed at boosting investment in the country and revitalizing Indonesia’s devastated economy.
The bill’s supporters claim the omnibus will “attract investors by cutting regulations on businesses, speeding approval of projects and eliminating many permit requirements,” the Times says. However, the bill has been met with opposition ranging from labor unions to environmental groups.
Channel News Asia reports that a coalition of 15 activist groups organized a nationwide strike from October 6th to October 8th in protest of the bill.
Heri Gunawan is a Parliament member who supports the bill. As Gunawan puts it, “This bill is meant to create jobs and attract investments, from within the country and abroad, that are expected to increase the prosperity of the people.”
“The job creation bill is said to ease the way for business activities that increase investment and create more jobs,” fellow Parliament member Marwan Cik Asan argues, “but the bill is full of various agendas that would potentially destroy the environment and violate the rights of the Indonesian people.”
“This is a catastrophic law,” Amnesty International Indonesia’s executive director, Usman Hamid, agreed. “It will harm workers’ wallets, job security, and their human rights as a whole.”
Amnesty International Indonesia also criticized the passage of the bill, saying that Parliament did not consult labor or rights groups and that the bill deprives Indonesian workers of their right to work and workplace rights. Hamid noted that the bill could violate Indonesia’s commitment to protect human rights as a signatory of the International Covenant on Economic, Social and Cultural Rights.
Labor unions have argued that the bill will harm workers by reducing severance pay (to 19 times monthly wages from 32 times now, according to Reuters), cutting mandatory leave, allowing longer work hours, and permitting businesses to hire contract and part-time workers instead of full-time workers.
Both labor and environmental interests argue that eliminating environmental reviews for new projects will lead to further destruction of Indonesian rainforests, which are key carbon sinks mitigating climate change. Indonesia is a major exporter of palm oil, a key ingredient in peanut butter, potato chips, and biodiesels, and palm oil producers have been responsible for much of the destruction of Indonesia’s rainforests. The passed bill could run afoul of restrictions the European Union is considering on the import of products produced through methods of deforestation.
Hours before the vote, a group of 36 global investors representing $4 trillion in assets under management released an open letter to the Indonesian government, calling for preservation of the environment and a long-term approach to recovery from the pandemic. Part of the letter read, “Protecting tropical forests is vital for combating climate change, the degradation of ecosystems, and biodiversity loss, all of which pose systemic and material risks to our portfolios as well as to the health of our societies, economies, and environment.”
As the world continues to reel from the coronavirus pandemic, some countries have chosen to expedite economic recovery – with mixed success. Indonesia’s attempt to revitalize its economy may come at a significant cost to workers and the environment. As the law takes effect, activist groups will be watching for the consequences.