Blog / 16 June 2020

The political and industrial elites in Indonesia grasp their opportunity

In September 2019, the streets of Jakarta were filled with angry demonstrators protesting against the Omnibus Employment Law. The law will ease the rules for mining, make it much more difficult to hold companies liable for criminal acts and severely restrict the power of the national anti-corruption committee. At the moment, such protests are completely impossible in Indonesia because of the COVID-19 crisis and the associated lockdown measures. And Indonesian people already had few other means of exerting influence on decision-making and legislative processes.

The Indonesian government, which had to act promptly at the beginning of March to bring the COVID-19 outbreak under control, took advantage of the situation to have the Indonesian parliament approve in record time a number of controversial proposals that had been the subject of heated protests last year.

More than 70 other legislative changes under the Omnibus Law are currently being pushed through parliament, one by one. No public consultations are possible on the law, and there is certainly no time to read the proposals, amounting to more than 1,000 pages, and to assess what their impact will be in practice.

Priority for companies

"The Omnibus Law shows how indifferent the government is to community rights," says Djayu Sukma of the organisation Yayasan Masyarakat Kehutanan Lestari in West Kalimantan. "By conducting the discussion on the law during the COVID lockdown and giving priority to the interests of investors and the largest companies, the government is abusing the mandate it has been given by the people."

"The idea behind the Omnibus Law – removing the inconsistencies between a lot of overlapping laws and regulations – is good in itself. The problem is that the law does this not to strengthen the position of local communities, but by legalising all the dirty practices of investors, such as land-grabbing, destruction of the environment, and ignoring human rights, including the rights of indigenous peoples. The potential consequences should not be underestimated."

No liability

The proposed legislative changes include, for example, minimising the obligation to prevent environmental damage and to draw up environmental impact assessments in advance, as well as punishments for those who violate the rules. In practice, this means that it will be much more difficult to make companies liable when they cause forest fires or other environmental harm.

In addition, the new law will abolish the obligation for palm oil companies to reserve 20% of their land concessions for the small-scale famers that formerly owned the land, so that they can continue to make a living among the plantations. Furthermore, the Indonesian central government wants authority over the management of land, forests and natural resources, so that local government no longer have any say on what happens to the land, forests and water in their regions, and all decisions will be taken in far-off Jakarta.

Shadowy process

The whole procedure also raises a lot of questions about the legitimacy of Indonesian legislative processes, and many civil society organisations have called for attention to this issue. "We have as many problems with the process as with the content of the proposed legislation," says Franky Samperante van Jakarta NGO Yayasan Pusaka, which works with indigenous and communities in forest and plantation areas. "The process is not inclusive, there are no public consultations and the government has mainly met with representatives of the business community. Most people in regional Indonesia, where the changes will have the greatest impact, know nothing of the legislative proposals."

Human rights and environmental legislation undermined

Decades of struggle by trade unions, environmental activists and human rights defenders are in danger of being undone in a short time. "If is it adopted, the Omnibus Law will undermine current human rights and environmental legislation more than another measures," says Andi Muttaqien of the Institute for Policy Research and Advocacy (ELSAM) in Jakarta.

According to the government, it is necessary to speed up adoption of the Omnibus Law during the lockdown so that investment can be attracted in the second half of 2020 to compensate for losses incurred during that same lockdown. "The government wants to make Indonesia more attractive to investors and promises that this will create jobs," says Muttaqien. "But if we look at the details, the law is actually very bad for the Indonesian people."

The response in the EU and the Netherlands

It is unclear what impact that the changes proposed in the Omnibus Law will have on ongoing negotiations on free-trade agreements between the EU and Indonesia. The Netherlands is the largest importer of Indonesian wood and palm oil in Europe and has committed to importing 100% sustainable palm oil in 2020. In addition, from 2020, Dutch imports of all agricultural products must not contribute to deforestation. It is still unclear how the Dutch government and importers will respond to the legislative changes in Indonesia, which conflict with these sustainable procurement obligations.

Towards a sustainable EU trade policy

In a time when there are increasing doubts about the industrial methods and development models that we have taken for granted for so long and when so many countries are making the transition to clean, sustainable and inclusive development models, it is especially alarming that the Indonesian government is taking these backward steps.

To combat these kinds of negative developments, not only in Indonesia but also in other countries where the EU obtains its food, energy and other crucial natural resources, Europe should make sustainability the main priority in its trade policies. The EU cannot simply rely on sustainability measures in producing countries, which are often vulnerable to changing political interests and national economic priorities, being adequate and complied with in practice. The EU must therefore impose strict binding criteria for imports, monitor compliance effectively, and terminate trade relations in cases of doubt.

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