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New Omnibus Law To Ease Investment In Indonesia

Indonesia’s government plans to submit a bill to parliament on Monday designed to replace dozens of overlapping laws viewed as a barrier to investment, a senior official said on Friday.

With growth in Southeast Asia’s biggest economy having been stuck at around 5% for several years, President Joko Widodo has said the new legislation is vital to boost investment and create jobs.

The bill will cover 79 laws, comprising over 1,200 clauses, and aims to streamline businesses permits, investment requirements and labor laws, said Susiwijono Moegiarso, secretary of the Coordinating Ministry of Economic Affairs.

Widodo, who started his second term in October, hopes parliament will pass it within 100 days.

Moegiarso said the world’s fourth-most populous country needed to create 9 million jobs per year, requiring much higher investment. “The government wants to create a conducive business climate,” he said.

“The ‘omnibus’ law draft will be submitted to parliament on Monday. We are finalizing the details, but the substance is all clear.”

It will simplify permit processes covering 15 sectors including manufacturing, agriculture, energy and mining, as well as environmental permits and construction, according to a ministry presentation.

The government will also remove a “negative investment list” that restricts foreign ownership in some areas. It will still set ownership limits in certain industries, said ministry official Elen Setiadi, but the cap will be determined by a regulation that will be easier than a law for the government to change.

On labor issues, the government will adjust parameters determining minimum wages to take into account economic conditions of different regions.

Previous governments have struggled to reform employment laws and unions are planning protests next week to oppose a bill they view as “pro-business”.

Moegiarso denied the new law would curb labor rights.

In the mining sector, the government plans incentives for downstream investors. These could include an extension of permits for as long as a mine’s lifespan, according to the presentation material.

The government may also remove coal miners’ royalty charges and rules on mandatory sales to power plants if a miner invests in a coal gasification plant, the documents showed.


(source: Reuters)