Indonesian House of Representatives officially endorsed 50 bills to be included in the 2020 national priority legislation program - Photo by Antara.

JAKARTA (TheInsiderStories) – Indonesian House of Representatives officially endorsed 50 bills to be included in the 2020 national priority legislation program in a plenary session of the parliament in Jakarta on Wednesday (01/22). Two of the bills are part of the wide-debate omnibus law that President Joko Widodo’s efforts to boost investment and create jobs in the world’s fourth-most populous country.

Supratman Andi Agtas, the chairman of the parliamentary body, a parliamentary group that sets legislation priorities, explained the bills determination had been carried out in a joint meeting with the justice and human rights minister Yasonna Laoly on January 16. The entire bills, he said, had been agreed by all commissions in the parliament to enter the 2020 priority list.

The part of omnibus law related to jobs and taxation that has run into resistance from labor unions they said pro-business are among the list. The priority bills also include one related to the capital relocation, Financial Services Authority, the banking and markets regulator, said deputy speaker Muhaimin Iskandar, who leads the ratification session at the plenary meeting.

The politically sensitive job creation and taxation bills are the top of Widodo’s second-term agenda as he said vital to bring out the country from the stalled 5 percent growth for several years. Widodo, who started his second term in October, hopes parliament will pass it within 100 days.

The bill on job creation would try to ease the restrictive rules used under the 2003 Labour Law to recruit or lay off employees. 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.

With the omnibus law, the government will revise 79 separate existing laws and 1,244 clauses and will overhaul Indonesia’s labor legislation, aims to streamline business permits, investment requirements, and relax foreign ownership rules. Widodo has said the 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 proposed legislation on job creation has been delayed several times already and has run into resistance from labor unions on Monday, which called for nationwide protests this week.

Meanwhile, the bill on taxation will allow the government to slash the tax rate on corporates to 20 percent in phases from 25 percent now. The new bill will also pave the way for the abolition of dividend tax if it’s reinvested and also cover tax breaks extended to various sectors, according to the finance ministry.

The parliament will also need to sign off on the bill seeking to move the nation’s administrative capital to Borneo island to allow Widodo’s administration to start the construction in 2021, with a view to having the administrative center fully operational by 2024. Widodo has announced the location will straddle two districts: Penajam Paser Utara and Kutai Kartanegara in East Kalimantan Province, the province’s two largest cities, which are a two-hour flight from Jakarta.

The president has said the move is needed to ease the burden on Jakarta and the rest of Java island, and to jump-start the economy in other parts of the archipelago nation. The capital will be built on 180,000 hectares of land already owned by the government, thereby minimizing the cost of land acquisition. Earthquakes, flooding, and volcanic eruptions are less common in that area.

The move will cost an estimated Rp466 trillion (US$34 billion), with the government intending to cover 19 percent of the cost. The rest is expected to come mainly from public-private partnerships, as well as direct investment by state-owned enterprises and the private sector.

US$1=Rp14,000

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