Good & Bad Effects of Implementing Omnibus Law in Indonesia

March 20, 20204:08 pm456 views
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In the first quarter of 2019, Indonesia only received 5.3 percent foreign investment which is equal to IDR195,1 trillion. This is the lowest investment during 2014-2019, where economic development is far from what the Indonesia government expected. As a result of low investment, the government planned to change and implement the new Omnibus law in an effort to fix the country’s sluggish economy. 

Omnibus law is a law that is created for a specific issue, such as an economic problem, by changing or repealing a certain law to make it more simplified. The law is aimed to amend (or even replace) several laws which are deemed hampering the creation of employment and investment in Indonesia. About 79 laws will be amended or replaced by the omnibus law. The 11 regulatory aspects which will be covered are business licensing, investment criteria, labour, protection and empowerment pertaining to micro, small, and medium enterprises (MSMEs), ease of doing business, research and innovation funding, governance, sanctions, land procurement, public investment projects, and economics zones. 

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Likewise, the omnibus law will re-regulate the tax sector and licensing matters in Indonesia. The Ministry of Finance is working on the draft omnibus law on the tax sector and the Coordinating Ministry of Economic Affairs is working on the draft on licensing. 

The CONTRA of omnibus law implementation 

Many Indonesians reject the omnibus law, nevertheless, because it might have an overlapping effect among authorities from different areas and might have an adverse impact on workers, especially blue-collar workers. 

Employment Contract Act 13,2003, which covers outsourcings, the provision of a specific time work agreement (PWKT), and employment rules in general, will be changed even removed that will disserve blue-collar workers and those who work in factories. As cited by Hukum Online, the clauses of the law do not change much, yet, blue-collar employees think it would disbenefit them. 

As an example, in the current Employment Act, it was mentioned that employment contracts should be renewed for at least a two-year time period, and can only be renewed one time for at least a one-year time period. Meanwhile, the new omnibus Employment Act cites that in a certain period, the completion of certain jobs will be based on the agreement of employer-employee. 

As mentioned, the amendment above implies that there won’t be job certainty for blue-collar workers whether they will be appointed as permanent employees or not. Not only blue-collar, every job sector could also be outsourced, meaning the future of workers and employees is not clear. When this law is implemented, employment dismissal can be easily conducted by employers with no minimum wage and severance pay.

Furthermore, this law would amend new regulation where crime sanction for entrepreneurs who violate or discriminate workers would be removed, and foreign workers can easily work in Indonesia that might be challenging for local job seekers to find new jobs. In addition, there won’t be social security for employees and/or workers.

The PRO of omnibus law implementation

As mentioned earlier, nonetheless, omnibus amendments are meant to simplify complicated laws in Indonesia that drive away investors from investing in Indonesia economy. President Joko Widodo cited that omnibus law will simplify complicated regulations that Indonesia has today. It can also strengthen Indonesia’s economy because, by the new simplified regulations, investors are expected to come and invest more in Indonesia. In other words, it will help the country compete with the global economy. Apart from this, omnibus law is cited to have strict regulation in terms of any crimes done by the government’s staff. That means corruption might and/or can be eliminated by implementing this new amendment. 

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