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Foreign Investors Warn Indonesia on Jobs Law’s Harmful Effects

October 6, 2020, 11.15 PM

KOMPAS.com - Foreign businesses have added to the voices opposing the Indonesian government’s Jobs Creation Omnibus Law, which earlier put the government under fire from labor and civil rights groups.

Thirty-five foreign investors from corporate powerhouses Aviva Investors and Japanese asset management giant Sumitomo Mitsui Trust Asset Management expressed misgivings about the bill, undermining its creators’ reasoning that it is designed to facilitate investment.

“While the [Jobs Creation Omnibus Law’s] proposed regulatory changes aim to increase foreign investment, they risk contravening international best practice standards intended to prevent unintended harmful consequences from business activities,” Reuters quoted Peter van der Werf of Dutch asset manager Robeco as saying Tuesday, October 6.

Also read: Indonesian Government Coalition Set to Pass Controversial Jobs Bill

The investors, which manage $4.1 trillion in assets between them, also expressed concerns over the bill’s effect on the environment.

“The legislation could hamper efforts to protect Indonesia’s forests, which would in turn undermine global action to tackle biodiversity loss and slow climate change,” they added.

“While we recognize the necessity for reform of business law in Indonesia, we have concerns about the negative impact of certain environmental protection measures affected by the Omnibus Bill on Job Creation.”

Also read: Indonesian Police Anticipate Labor Protests Against Jobs Bill

The Indonesian government passed the law in parliament as President Joko Widodo’s coalition government controlled 74 percent of the seats. The legislators claimed the law is needed to improve the investment climate and streamline regulations in Southeast Asia’s biggest economy.

The opposition Democrat and Social Justice (PKS) parties, along with a coalition of 15 civil society and labor groups, including trade unions, opposed the bill. They pledged to strike and protest in front of parliament.

(Writer: Luthfia Ayu Azanella | Editor: Rizal Setyo Nugroho)

Sources:

https://www.kompas.com/tren/read/2020/10/06/075035465/investor-asing-peringatkan-uu-cipta-kerja-ancam-hutan-tropis-indonesia?page=all#page2

https://www.reuters.com/article/us-indonesia-economy-law-investors-idUSKBN26Q1GZ 

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