Indonesian government hand over the omnibus law draft to the parliament this week to replace dozens of existing, overlapping laws with bills to improve the investment climate - Photo: Special

JAKARTA (TheInsiderStories) – Indonesian government hand over the omnibus law draft to the parliament this week to replace dozens of existing, overlapping laws with bills to improve the investment climate, officials said on Friday (01/17). Along with it, the trade unions confederation to mobilize thousands of people in parliament today to reject the draft law on labor issues and health insurance fees.

President Joko Widodo has said the new legislation is vital to boost investment and create jobs and hopes parliament will pass it within 100 days. The new bills will try to simplify rules in a wide range of areas, including investment requirements, research, and innovation, as well as more sensitive issues such as labor and land acquisition rules.

The bill will cover 79 laws, comprising over 1,200 clauses, and aims to streamline business permits, investment requirements and labor laws, said Susiwijono Moegiarso, secretary of the Coordinating Ministry of Economic Affairs in a press conference over the weekend.

Moegiarso said the world’s fourth-most populous country needed to create 9 million jobs per year, requiring much higher investment. It will simplify permit processes covering 15 sectors including manufacturing, agriculture, energy, and mining, as well as environmental permits and construction.

“The government wants to create a conducive business climate. The omnibus law draft will be submitted to parliament starting Monday. We are finalizing the details, but the substance is all clear.” he said.

Coordinating Economic Minister Airlangga Hartarto earlier has said the government will also remove a negative investment list which broadly aims to reduce current account deficit, improve financial stability, and stimulate growth. In its place, the government will issue a positive investment list.

The new policies will focus on restraining imports and expanding exports as well as boosting foreign investments in the country. As such, the measures will include tax incentives to attract foreign direct investment (FDI) and the opening up of several market sectors to foreign investment, Hartarto said.

On labor issues, the government will adjust parameters determining minimum wages to take into account the economic conditions of different regions. Previous governments have struggled to reform employment laws and unions are planning protests on Monday to oppose a bill they view as pro-business.

Unions President Said Iqbal revealed on Sunday the rally will be joined by 30 thousand workers in Jakarta, Banten, and Jawa Barat. Whereas in other provinces, the protest will be centered at each regional House office. If it is not responded to, the workers have planned further protests with strikes.

“The strike is not just factory workers, but also workers from offices. Our workers at Indosat, Telkomsel, and others will leave,” Iqbal said.

Hartato told reporters on Wednesday the main points of the revise in labor rules, have been completed. The bill is currently awaiting legal drafting and includes 11 clusters such as simplification of licensing, investment requirements, employment, ease, empowerment and protection of medium and small-medium enterprises, business easiness, research support and innovation, government administration, the imposition of sanctions, land procurement, government investment and projects, and economic zones.

“We have discussed the substance of these 11 clusters intensively with 31 related ministries and institutions,” he said, adding so far 82 laws and 1,194 articles have been identified that will be harmonized through the labor omnibus law. He said one law could be included in several clusters, so the number of laws was not the total sum of all clusters.

The bill would try to ease the restrictive rules used under the 2003 Labour Law to recruit or lay off employees, Hartarto said. The existing labor law includes some of the most generous severance pay rules in the world that investors have cited as a hindrance to formally hire staff.

Iqbal also said workers refused to increase health insurance contributions, especially third class, which was considered to reduce the purchasing power of the community, especially laborers.

The contributions will be increased starting this month. First-class contributions will increase from Rp80,000 (US$5.71) to Rp160,000 per month, second class raise from Rp51,000 to Rp110,000 per month. And the third class is planned to increase from Rp25,500 to Rp42,000 per month.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com