Why is Indonesia fighting President Widodo’s oppressive economic plan?

Indonesia protests

By Anna Shepherd

On 5th October 2020, the Omnibus Law on Job Creation was passed in Indonesia, simplifying 79 existing laws concerning various, unrelated rights of Indonesian citizens.

This kind of controversial law has come to be a legal zeitgeist in Indonesia during the Covid-19 era, with four being implemented at the start of the year. 

Yet, it is this most recent law that has caused the most upset. Despite the law being passed as an economic stimulant, creating jobs and enticing foreign investment, it has been criticised for its possible negative effect on indigenous groups, labour rights and environmental protections.

With the economy shrinking by a significant 5.3% in the second quarter of this year, the most recent omnibus law intends to fight the economic decline Indonesia has faced as a result of the pandemic. Like many other countries, this economic fallout has only been compared with other countries’ responses to the outbreak, such as South Korea, the fourth largest economy in Asia to Indonesia as fifth, which seems to have avoided relatively massive economic decline. 

It seems an extreme approach to try and cut the losses caused by Covid-19; the law is expected to create 3 million jobs for young people and a further 6 million jobs for those unemployed due to the virus. 

The realities of the Omnibus Law

President Widodo hopes that by weakening existing laws, a facet of this omnibus law, the Indonesian economy can entice more foreign investors making their exodus from the Chinese market in the wake of international tensions. Whilst this seeks to frame the Indonesian economy as a welcoming financial hub, the realities of the law affect the country’s working citizens profoundly, particularly concerning its potential to restrict women’s financial independence.  It is this precedent that is most scarring in the eyes of the Indonesian people.  

Women will no longer be able to access paid leave for childbirth, thus compromising the financial security of many women. Such a legal move could define women’s bodies as a barrier to financial autonomy . The bill will also further halt paid leave for weddings, baptisms and bereavement. Overtime for work will also increase to four hours per day and severance pay will be reduced from 32 monthly wages to 19, although this will be supplemented by the government adding six months pay to those newly unemployed. 

President Widodo, when asked in a recent BBC interview about the importance of the environment and human rights, stated that, in his second term, he is focusing on “human capital.” He stated: “I cannot do everything. It’s not that I don’t want to, but I prefer to focus on the priorities when I work.”

A law criticised on many fronts

Although the law was passed by seven out of the nine parliamentary parties, it seems the focused priorities President Widodo is referring to bear a vast disparity to those of the Indonesian public, and indeed to many human rights charities and financial investors.  

The dominating response to the law has been criticism on many fronts.  Protests have been heavily attended, with 6,000 people being arrested as of 12th October in major cities such as Bandung and Medan. The largest Islamic association in Indonesia, Nahdlatul Ulama, have vowed to launch a judicial review into the constitutionality of the law, with its chairman Said Aqil Siradj calling it “oppressive” and benefitting only “tycoons, capitalists and investors.” 

Yet, criticism has even come from investors themselves, with 35 investment firms, who represent $4.1 trillion, writing an open letter to the Indonesian government opposing the law with environmental concerns. 

These concerns seem to be well-founded given Indonesia is one of the world’s biggest producers of palm oil, the production of which necessitates deforestation. Partly as a result of this, Indonesia temporarily overtook the United States in greenhouse emissions in 2015. The law would make it easier for companies to exploit the oil-rich forests in Indonesia, as only enterprises deemed high-risk will need a permit to take an environmental impact assessment.  

The International Federation of Journalists has stated in an open letter to the Indonesian government  that the omnibus law “put[s] the interests and demands of foreign investors ahead of workers, communities and the environment.”  

It certainly seems the Covid-19 pandemic brought into stark relief the polarised priorities of the Indonesian government and its people. As the country progresses into the practical ramifications of the law, it seems that while it may help the economy recover in time, there will be a significant cost to pay in the lives of workers and especially women.