JAKARTA: Indonesia’s parliament on Tuesday voted to pass President Joko Widodo’s emergency decree to cement rules on investment and jobs in Southeast Asia’s biggest economy, replacing a similar 2020 law that had been ruled partially unconstitutional.
The law, which revises more than 70 other laws, has been praised by foreign investors for streamlining business rules, but also criticised by labour and green groups as being too pro-business.
The changes under the 2020 law include cuts in severance benefits, new minimum wage limits, removal of some mandatory paid leave, and looser rules on environmental inspections for investment.
In 2021, the Constitutional Court ruled the passage of the law was flawed due to inadequate public consultation and ordered a renewed debate process in parliament within two years.
Tuesday’s passage of the decree meant most of the changes brought about by the law would stay, with some small changes on labour rules.
“The job creation decree is a measure to mitigate global crises (It) prevents problems from spreading and global vulnerabilities to affect the national economy,” chief economic minister Airlangga Hartarto told parliament after the passage.
He cited challenges ranging from slowing global growth, climate change, the war in Ukraine to recent problems affecting some US banks.
Some legal experts have criticised the decree as a government ploy to bypass the court’s order.
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Airlangga reiterated that the decree was needed to avoid a legal vacuum after the court’s decision.
Experts have also questioned the use of the decree, officially known as a government regulation in lieu of law, especially after parliament delayed its vote by more than a month.
Under Indonesia’s constitution, a president is only supposed to use such a decree to address an emergency and parliament is supposed to vote on it in the first sitting after its issuance.
The jobs decree was issued in December, but parliament failed to bring it to a wider vote before going into recess in February.
Two out of nine parties in parliament opposed the decree during the plenary session, with members of the opposition Islamist party, the Prosperous Justice Party, walking out before speaker Puan Maharani announced the vote had been passed.
The Indonesian Employers Association welcomed the passage for bringing legal certainty, its official Anton Supit said, though he noted that businesses still disagreed with some parts of the law such as the minimum wage formula.
“We support this law because it will increase employment, and strengthen the national economy,” Anton told Reuters.
Around 300 members of the Labour Party, which currently has no seat in parliament but plans to contest the 2024 elections, were rallying to protest the passage of the decree near the manpower ministry office.
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