In the third quarter of 2019, economic growth in Indonesia decreased to a three-year low of 4.97 percent as a result of shrinking exports and investments. President Jokowi reacted by drafting the Omnibus Bill on job creation as an effort to boost the economy. The business owners and investors claim that Indonesia is over-regulated, with heavy bureaucracy through central government regulations as well as ministerial-, agency- and regional-level rules posing a burden to business owners and companies. The Omnibus Bill on job creation suggests amendments to 73 laws and consists of 15 chapters and 174 articles to reduce bureaucracy and make Indonesia more attractive for investors.
The Omnibus Bill was submitted to the House of Representatives in mid February 2020. The Government announced the Parliament should adopt the bill within 100 days. Many groups, ranging from labor associations to environmental groups and human rights have criticised the bill as promoting non-sustainable economic growth in Indonesia. Areas like the provinces of Papua and Papua Barat, which have become of interest for large scale agricultural projects and mining operations will be particularly affected.
Environmental groups in Indonesia have protested against the bill as it significantly lowers environmental standards for business activities. The bill suggests amendments to article 23 of Law 32/2009 on environmental protection and management, which requires an Environmental Impact Analysis (AMDAL) for all business operations causing impacts on the natural landscape, social-cultural live or conservation as well as cultural heritage. The article lays out the criteria for an AMDAL prior to operation. The Omnibus Bill stipulates that only businesses that “have important effects on the environment, social, economic and culture” will require an AMDAL, which should be regulated in a Government Regulation (PP).
Moreover, amendments to article 26 of the same law states that affected communities will no longer be able to appeal an AMDAL study. Environmental experts – such as environment agency, related technical institutions, environment and technical experts, environmental organisations and public representatives – shall no longer be involved in the Environmental Impact Analysis.
AMDAL requirements are part of the legal framework to guarantee the principles of free, prior informed consent (FPIC) as an internationally agreed standard in the protection and promotion of indigenous peoples’ rights. Marginalisation of indigenous communities, land-grabbing and environmental pollution due to palm oil plantations and mining operations are rampant in West Papua. In many locations across West Papua, business operations keep contributing to impoverishment among indigenous communities and threaten their livelihoods. This situation is only likely to aggravate if the Omnibus Bill is adopted by the House of Representatives. The exclusion of environmental experts and affected communities would make the AMDAL a merely bureaucratic minor requirement for companies.
Disturbance of power balance
Human rights activists argue that the Omnibus Bill contains amendments which will considerably change the democratic power balance in Indonesia – the role of regional governments will be weakened. The Central Government will be the driving force in the approval of concessions and business licenses and will be able to overrule regulations on lower administrative levels. Article 170 of the bill gives the Central Government the authority to change prevailing laws through a Government Regulation (Peraturan Pemerintah, PP) in consultation with the House of Representatives. According to the Omnibus Bill draft, local regulations at the provincial, regency or municipality administration level which contradict prevailing and higher laws and regulations can be revoked directly by the president through a presidential regulation (Perpres). Currently, article 251 of the Regional Government Law only allows for revocation of local regulations by the Governor, as the representative of the Central Government in the provinces.
The Bill will also weaken the regional governments’ role in business licensing. The authority for some types of licenses will be entirely shifted to the Central Government. The amendment of article 350 (4) of Law 23/2014 on regional governments would require them to use electronic licensing systems that will be managed by and streamlined to the central government. If regional government bodies fail to streamline regional business licensing, the Central Government takes over the regional governments’ licensing functions. This is particularly concerning in the field of environment-related licensing. Revisions to the Law 32/2009 on environmental protection and management will enable the central government to take over environment-related licenses from regional governments, including the approval of Amdals.
This power shift is particularly problematic in provinces which have been granted a special autonomy status, as it is the case in the provinces of Papua and Papua Barat. Many amendments of the Omnibus Law undermine the self-governing rights and functions of the Regional Government. The inconsistent implementation of the special autonomy law has often been criticised by law makers, public figures and civil society groups. The adoption of the Omnibus Bill will enable the Government to entirely control investments and business licensing in West Papua. The reality has shown that local and provincial governments often fail to monitor that companies respect FPIC standards. This situation is likely to become worse when government officials in distant Jakarta will suddenly decide over the fate of customary lands in West Papua. Moreover, the Central Government may overrule any special regulation (Perdasus & Perdasi) by local governments that contradicts business or national interests. Such interventions would additionally shake the Papuan people’s trust in the special autonomy and will strengthen aspirations for self-determination.
Abandoning labor rights
The Omnibus Bill contains various articles which abandon the rights of laborers, which are guaranteed under current laws. In the context of West Papua, the most striking amendments relate to the regional minimum wage scheme. The Omnibus Bill regulates that labor-intensive industries will no longer have to adhere to regional minimum wages. However, governors may use different formulas in their calculations while further details should be covered in a separate government regulation. Micro and small businesses are only required to pay workers above the poverty line rate.
Furthermore, labor rights regarding paid leave under certain circumstances, which have been regulated by article 93 of Law No. 13/2003 on manpower will be abandoned by the Bill. According to article 93, employers are required to approve paid leave of three days when workers get married, two days when their children are circumcised or baptised or get married, or when their wives are in labor. Workers whose family members pass away get one to two days of unpaid leave in the current regulation.
The amendments may strongly affect the labor rights situation in West Papua, where many people work in the extractive industry sector for palm oil plantations, logging or mining companies.