Introduction
Indonesia’s adoption of the Omnibus Law back in late October of this year despite strong concerns and rejection from communities highlights growing concerns that the Indonesian government seems to be out of touch with ongoing negative public sentiment caused by the ongoing COVID-19 pandemic. The government’s preoccupation on long-term post COVID-19 economic recovery signified by the justification of signing the Omnibus Law could potentially have dire consequences to the country’s stability and could potentially undo years of economic progress.
Omnibus Law: A Misguided Post Pandemic Economic Recovery Strategy
The Omnibus bill, also referred to as the job creation bill, was signed into law by the House of Representatives (DPR) in late October with the hopes of providing a much-needed re-haul to the country’s labour system and natural resources management. The first mention of the law was made by President Joko Widodo (Jokowi) back during his presidential inauguration on October 2019 with the first draft of the bill circulated to the public on February 2020. The then 905-page law has included the amendment of 79 prevailing laws concerning labour, spatial planning and environment management to improve bureaucratic efficiency and address existing red tapes during the process of application for a business permit. President Jokowi during the Presentation of the Government Statement on the Bill of the State Budget for 2021 fiscal year stated that the adoption of the Omnibus law will serve to support Indonesia’s post COVID-19 pandemic recovery.
However, the signing of the bill has been met with strong opposition which later escalated into mass protests in the streets of Jakarta by labour unions, university students and civil society groups after it was signed into law. Protesters has decried the government for its lack of transparency and protested the lack of prior consultation with relevant stakeholders within the community. There has also been public sentiment that the signing of the bill was rushed and that the government had been prioritizing non-pressing issues amidst Indonesia’s worsening COVID-19 infection rate. The signing of the Omnibus Law suggests that the government of Indonesia is underestimating the prolonged impact of COVID-19 to the economy and the mass unrest the pandemic has on the population.
By signing into law a bill that affects the livelihoods of many workers mostly impacted by the COVID-19 such as labours effected by mass layoffs, the government only seems to be playing with fire. With overemphasis on long-term recovery instead of the ongoing COVID-19 pandemic, the government has effectively sidelined the need for stricter health protocols and adequate testing regime to mitigate larger economic losses incurred by the country. This indicates that there seems to be a mismatch between the government long-term economic ambitions and realities on the ground.
With recent data indicating that Indonesia has reported a total of 450 thousand COVID-19 cases as of October, The Institute for Economics and Finance (INDEF) has projected that Indonesia could suffer IDR 127 trillion (USD 8.7 billon) due to the ongoing pandemic, and with infective policies currently in place, and the lack of consistency in enforcement of appropriate health protocols, there is valid reason to worry that Indonesia economy will take a much longer time to recover.
Urgency of the Omnibus Law: A Less than Lukewarm Reception?
There are a few clauses within the Omnibus Law which affects the most vulnerable communities during the COVID-19 pandemic, firstly, under the new law, factory workers will be hired on contract basis instead of being provided with permanent contracts upon employment. Labour unions has pointed out that under the new clause, labour will be hired through third party outsourcing entities which will render them powerless against their employers due to the lack of clarity on whom would pay the severance packages (employer or the outsourcing entities). Secondly, the government will reassign minimum pay which was previously set to district levels to now provincial levels. Complaints about this clause centred on the argument that minimum pay based on district levels are larger of that based on the provincial level. Lastly, if speculations are true, the elimination of work period contract and opting for contract for life will render workers without adequate healthcare and retirement package.
The implementation of the Omnibus Law will undoubtedly have an impact on workers, especially due to the potential loss of income and social safety nets. This is also compounded by existing fears caused by COVID-19 which causes large amount of worker lay-offs. The Ministry of Manpower on April of this year mentioned that nearly 1.2 million workers from 74,439 companies have been laid-off or have been told to stay home indefinitely. It is likely the number of people that will be further impacted by job loss will increase until the government prioritizes keeping the spikes of COVID-19 infections down. Despite the bleak economic outlook, the concerns from workers towards the Omnibus Law mostly stems from speculations due to the lack of government transparency. However, it is worth noting that the government’s attempt to re-organize Indonesia’s manpower to increase productivity are well justified. A survey from Japan External Trade Organization of 20 countries in Asia and Oceania shows that Indonesia’s manufacturing sector has the lowest productivity rate in comparison to its other Southeast Asian neighbours.
Another point of contention within the new Omnibus Law is that the simplification of granting land rights, opening land concessions for palm oil and regulatory compliance under the law will be directly under the central government instead of regional authorities. This include the government’s power to implement a national policy on environmental management, without excerpts mentioning the need for prior consultation with related communities owning community and tribal lands. The law has been seen by both environment groups and businesses alike as having the potential to further weaken environmental safeguards already in place since it provides a leeway for local business oligarchs to expand their business with impunity. Foreign businesses alike have also expressed their concerns regarding the new land rights and environmental law with 35 foreign enterprises reportedly sending a letter of concern to the Indonesian government. These foreign enterprises fear that the new law can negatively impact their business reputation, operations, regulations and environmental management.
Both cases concerning changes in the labour law and spatial planning suggest that the regulation lacks both a receptive response from Indonesians and positive sentiment from international businesses which the Indonesian government intends to attract. One key theme of the two arguments highlights two pressing concerns regarding the Omnibus Law: 1) it is untimely given existing economic concerns by those hard hit by the COVID-19 pandemic and 2) highlights the need for further consultation with relevant stakeholders before it is enacted into law. Amnesty Indonesia further mentioned that the signing of the Omnibus Law undermined Indonesian workers need for political participation.
Health Security vs. Economic Growth
The COVID-19 pandemic also highlights Indonesia’s current inadequacy in providing adequate health care towards a large portion of its citizens. Current shortfalls in enforcing adequate testing regime’s, adequate communication, increasing hospital capacities and ensuring universal access will impede Indonesia’s ability to recover economically. The government needs to realize that as part of a broader economic recovery strategy, ensuring that consistent centralized policies need to be enforced to reduce reported COVID-19 cases. In terms of giving a much-needed boost towards Indonesia’s attractiveness to foreign investors, mismanagement of the ongoing COVID-19 pandemic will cast doubts for would-be investors of Indonesia’s ability to govern.
One key theme that emerges during the passing of the Omnibus Law is that the government needs to balance the need to keep the rate of COVID-19 infections down and the need for economic growth. The debacle of passing the Omnibus Law seems to indicate that the current administration seems to view aspects of health security as being unrelated to future economic growth. While there is no denying the need for the government to also invest their time and resources to think of strategies for post COVID-19 economic recovery, ensuring the health of the population cannot be separated with the need for economic growth. For Indonesia’s economy which relies heavily on domestic spending, services and hospitality sector it is crucial that the population have adequate assurance that the government has the pandemic under control. Many Indonesians are undoubtedly effected by the ongoing pandemic with lay-offs and economic uncertainty greatly diminishing the spending power of Indonesians which in turn further weakens the Indonesian economy. While focusing on economic reforms that focus on economic recovery may seem like a desirable option for the government to partake, such reforms cannot be pushed during times of mass unrest caused the ongoing pandemic especially without prior consultation with those mostly effected by the Omnibus Law. It is increasingly clear that such reforms need to wait, and instead the government needs to invest more time and attention in protecting the safety of what is runing the Indonesian economy: its citizens. Indonesia’s economy would not function while its people constantly fear the loss of their livelihoods caused by the pandemic.
