Indonesia parliament passes government's flagship jobs Bill into law

JAKARTA: Indonesia's parliament voted on Monday (Oct 5) to pass into law President Joko Widodo's flagship "Job Creation" Bill aimed at improving the investment climate in Southeast Asia's biggest economy, as labour groups vowed protests over the legislation.

Seven out of nine parties accepted the Bill, while two rejected it in a vote where some lawmakers attended virtually via video conference due to the coronavirus pandemic.

The so-called "omnibus" Bill, aimed at revising more than 70 existing laws in a single vote, intends to speed up the pace of economic reform and improve the country's investment climate.

Global investors have been watching closely the Bill's progress in the lead-up, particularly regarding controversial changes proposed to the 2003 labour law, citing a need for Indonesia to compete better for manufacturing relocating from China.

READ: Indonesian parliamentary committee finishes deliberating contentious jobs Bill

The Bill will cut the mandatory severance benefits paid by employers to 19 times monthly wages from 32 times now, in line with government proposals, a draft seen by Reuters showed.

A coalition of 15 activist groups, including trade unions, condemned the Bill in a statement on Sunday and called on workers to join a planned national strike from Tuesday to Thursday.

Yusri Yunus, a spokesman for Jakarta police, said that a permit for the protest had not been approved.

"With the COVID-19 situation ... we advise all of them not to demonstrate," Yusri said.

READ: Indonesia unions threaten strike over government's labour reforms

Workers opposing the Bill argue the legislation would be a "red carpet for investors, widening the power of the oligarchy" by not only hurting labour protection, but also taking away land from farmers and indigenous communities, according to the coalition's statement.

READ: Bali's unemployed turn to odd jobs, hard labour as COVID-19 ravages tourism sector

"Seeing the final (draft), I think the House of Representative has its considerations based on input from many parties," Rosan P Roeslani, chairman of the Indonesian Chamber of Commerce chairman, told Reuters.

"It is something that they (foreign investors) are waiting for".

FORESTS AT RISK

Global investors managing US$4.1 trillion in assets have warned Indonesia's government that the Bill could pose new risks to the country's tropical forests.

READ: Death threats, intimidation not a deterrence to scientist's mission to save Indonesia forests

In a letter seen by Reuters, 35 investors expressed their concerns, including Aviva Investors, Legal & General Investment Management, the Church of England Pensions Board, Netherlands-based asset manager Robeco and Japan's largest asset manager Sumitomo Mitsui Trust Asset Management.

"While we recognise the necessity for reform of business law in Indonesia we have concerns about the negative impact of certain environmental protection measures affected by the omnibus Bill on Job Creation," Peter van der Werf, senior engagement specialist at Robeco, said in a statement.

Investors said they feared the Bill could hamper efforts to protect Indonesia's forests, which would in turn undermine global action to tackle biodiversity loss and slow climate change.

"While the proposed regulatory changes aim to increase foreign investment, they risk contravening international best practice standards intended to prevent unintended harmful consequences from business activities that could deter investors from Indonesian markets," the letter said.