Conditionally unconstitutional (Nov. 19-26)
Court rules against Job Creation Law
Hello Coconauts,
Thank the news gods that this week’s biggest story is not one that revolves around a verbal spat at the airport between two privileged parties or whether or not we should pay to urinate (more on those later, though), as the Constitutional Court has ordered revisions to a law that has become the cornerstone of President Joko Widodo’s economic policy.
In this free edition of Indonesia Intelligencer, we’ll look at the ruling against the government’s Job Creation Law and what that could mean to Indonesia’s economic prospects in the years ahead. And, as always, we’ll also highlight all the biggest happenings from across the archipelago this week.
Stay safe, stay informed, and we’ll see you next week!
Business and the economy
Command to amend
Indonesia’s Constitutional Court (MK) on Thursday ordered the government to amend parts of its omnibus law on job creation, which was meant to spur economic activity by overhauling investment regulations.
The court deemed the law “legally defective” due to late changes in the final version of the bill from the one presented to parliament, as well as mistakes in the law’s citations of existing regulations that it’s meant to supersede. The drafting of the bill was indeed criticized for being rushed before it was passed into law in 2019.
MK rejected calls from labor groups to brand the law completely unconstitutional. The court gave the government two years to revise the law’s problematic content — which has yet to be deliberated — or the entire legislation will be ruled unconstitutional.
The government said it will obey the court’s unappealable ruling, but it will keep enforcing the law as it is in the next two years. Nevertheless, experts say the ruling could dim investment outlook, as corporate actions may be delayed amid legal uncertainties.
The passing of the law in 2019 was dogged in controversy amid concerns that it would erode labor rights and cause further neglect to environmental concerns in the name of luring investment.
The bare minimum
Riding on the wave of MK’s ruling, labor groups are set to protest provincial minimum wages (UMP) for 2022, which were determined on the basis of the Job Creation Law.
Laborers are demanding 4-5 percent UMP increase in 2022 based on Law no. 13/2013 on Manpower and Government Regulation no. 78/2015 on Remuneration. Across all 33 provinces, UMP is set to be raised by an average of 1.09 percent.
Jakarta, which has the highest UMP in the country, this week set its 2022 minimum wage at IDR4.45 million (US$310), which is only a 0.8 percent increase from 2021.
Pay to share
Inspired by a groundbreaking Australian law, Indonesian authorities are reportedly mulling a draft bill that could compel internet giants like Facebook and Google to negotiate with media firms for fairer revenues.
Groups lobbying for the bill have expressed hope that the measure would help upkeep journalism standards in the country, while requiring big tech firms to do more to filter out fake news and hoaxes.
World’s best IPO
Indonesian cloud data service provider PT DCI has received the title of the world’s best performing IPO this year, which has soared 10,852 percent since its US$10.5 million listing in January.
The huge gains illustrate frenzied trading in Indonesian technology stocks this year, with a key gauge of the sector having surged nearly four fold since its launch in late January.
The gig is up
Home broadband service Indosat GIG went offline on Nov. 25, citing inability to continue operations. Its parent company is set to begin payment of an IDR1.3 trillion (US$90 million) fine after it was found guilty of illegal use of the 2.1 GHz frequency band in 2014.
The Information and Communications Ministry says it will ensure that all of Indosat GIG’s 27,000 customers receive their fair compensations, which amount to IDR3.2 billion (US$223,124).
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Southeast Asia’s Netflix challengers perished last year, but Indonesia’s Vidio remains alive and kicking after recently raising US$150 million. Despite the windfall, Vidio is still to find a strategy to threaten the global giants that dominate Indonesia’s US$366 million online video market.
Across the archipelago
The trickle effect
State-Owned Enterprises (SOE) Minister Erick Thohir this week launched the topic of gas station pay toilets to the limelight, after he made a plea on social media for state-owned oil and gas company Pertamina to waive all charges to use what is ostensibly a public facility.
In response, Pertamina pledged that it will instruct gas station operators to ensure that customers don’t have to pay to tinkle (and beyond), while still maintaining toilet cleanliness standards (not that they are particularly high at gas station toilets).
Entitled, much?
Another contender for most discussed topic nationally this week revolved around a quarrel at Jakarta’s Soekarno-Hatta Airport, where a member of parliament and his mother traded verbal blows with a woman who claimed to be the daughter of a military general. The source of conflict? The former party apparently took too long exiting the plane, thus holding up the latter’s exit.
The two parties then reported each other to the police for defamation and verbal threats in what was seen as a big, dramatic privilege-waving contest.
As quickly as the heat escalated, so, too, did an apology come, with both parties agreeing to drop charges in a press conference filled with warm embraces. It was also revealed that the woman lied about having a general for a father, but she is indeed part of the military family by account of her husband being a lieutenant.
Natuna concerns
Indonesia has pledged to develop 27 islands in Natuna regency, which it sees as crucial to protecting its maritime borders in an area frequently visited by foreign vessels from China and Vietnam amid the South China Sea territorial disputes.
Though China has acknowledged that the islands lie beyond the nine-dash line Beijing uses to assert its territorial claim, two senior ministers this week visited Natuna to reassure the 81,000 residents and other Indonesian citizens that it is taking the matter seriously.
Formula E-yikes
The Corruption Eradication Commission (KPK) says it will look into Jakarta’s commitment fee to secure hosting rights for next year’s Formula E race, amid reports that the capital may have paid more to race organizers compared to other host cities.
The fee was previously reported to be IDR560 billion (US$38.9 million). Even if there are no shady dealings surrounding the deal, the Jakarta Provincial Government has nonetheless come under intense criticism as the reported fee still dwarfs the city’s budget for essential public works and maintenance.
Scenes from Mandalika
Lombok’s newly-constructed Mandalika circuit hosted its inaugural grand prix over the weekend, in which Turkish racer Toprak Razgatlıoğlu emerged as the World Superbike champion at the season’s curtain-closer.
Among the memorable moments from the race include a heavy downpour that delayed one race and led to locals getting up to all sorts of shenanigans. Furthermore, a rain shaman sued somebody who questioned his abilities, while accusations have emerged that dogs in the area had been poisoned so they don’t disrupt the race.
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