ASEAN Pace | Economy | Southeast Asia
The regulation, which aims to make Indonesia a more attractive destination for foreign investment, has been strongly opposed by trade unions and environmental groups.
Indonesia’s parliament passed an emergency regulation on jobs and investment, replacing a sweeping October 2020 law that was struck down by the Constitutional Court. In a session on Tuesday, Reuters reported that the regulation was approved with the support of the seven parties of the ruling coalition of President Joko “Jokowi” Widodo.
Jokowi signed the decree in December, following a November 2021 ruling by the Constitutional Court that declared the original law partially unconstitutional, due to inadequate public consultation. The Job Creation Law, as it was known, was a package of legislation passed by Parliament in October 2020, which revised more than 70 other laws to simplify regulations and make Indonesia a more attractive destination for foreign investment.
From the start, however, the law has faced strong opposition from unions and student activist groups, who say it waters down labor standards and environmental safeguards to fatten the profits of big business. The passage of the law was accompanied by mass protests across Indonesia, after which unions and civil society groups filed a judicial review with the Constitutional Court. Jokowi’s signing of the emergency regulation in December also sparked protests.
The Constitutional Court ordered the government amend key parts of the legislation within two years of the law’s passage. Jokowi’s emergency regulation, which required parliamentary approval, was designed to comply with the court’s request. The new regulation is not radically different from the original legislation; contains some improved provisions, including minimum wages for subcontracted workers.
Airlangga Hartarto, the coordinating minister for economic affairs, told parliament the new law was needed to boost Indonesia’s competitiveness in uncertain times, including climate change, the Russia-Ukraine war and the ongoing economic fallout from the COVID pandemic. -19, Reuters reported.
“The job creation decree is a measure to mitigate global crises,” he said, adding that it would prevent “problems from spreading and global vulnerabilities from affecting the national economy.”
But critics say it still overwhelmingly prioritizes big business at the expense of Indonesian workers. Tuesday’s vote was largely split along party lines, with Jokowi’s grand coalition parties supporting the legislation and the two opposition parties, the Democratic Party and Prosperous Justice Party, opposing it. As BenarNews reporteda Democratic Party lawmaker described the law as “formally and constitutionally flawed.”
The law was also Labor party opposition, which has no seats in parliament but plans to stand in elections early next year. Around 300 party members held a rally to protest the new law on Tuesday, with the party vowing to file a further complaint with the Constitutional Court in a bid to once again halt its progress.