Stock Groups

Indonesia jobs law ruling could dim investment outlook, experts say -Breaking

© Reuters. FILEPHOTO: Indonesian trade union members hold signs during protests against the government’s labor reforms. Indonesian Constitutional Court readings verdict of judicial review on controversial ‘omnibus, or job creation law.


Bernadette Christina and Fransiska Naangoy

JAKARTA (Reuters – Indonesia’s court ruled against a proposed new law for job creation, potentially affecting Indonesia’s investment prospects. This could come as a setback to President Joko Wondodo’s push to encourage investment and lessen the dependence on consumer spending.

The Constitutional Court on Thursday ordered the government to make amendments to the legislation within two years, citing procedural flaws in the way it was handled. The government stated that it will comply.

Indonesia had hoped to use the law as a way to encourage foreign investment. They cited related changes in Indonesian economic structure that saw measures taken to reduce red tape, relax labor rules and increase permitting.

Helmi Arman, an economist at Citibank, stated in a client letter that it was possible for some investments decisions to be delayed or company actions to be delayed while lawyers analyze the consequences of the court ruling.

He noted that the deadline for amendments in late 2023 was right before 2024’s general election, which could have caused some confusion among lawmakers.

Regulations derived by the new law, according to government, will not be changed.

Ahmad Redi, Tarumanagara University’s law expert, stated that although the court cited some procedural flaws in the decision and dismissed union complaints about specific articles, the content of the law could still change.

Redi stated that the process might have to be restarted by parliament and the government.

Redi stated that the court had made an order to increase public participation in amendment processes. If the public requests certain material changes, then the substance may be changed.”

Jokowi is the President. He is interested in investment as the primary pillar of Indonesia’s resource-rich economy.

More than half of Indonesia’s economy is accounted for by household consumption.

Disclaimer: Fusion MediaWe remind you that this site does not contain accurate or real-time data. CFDs include stocks, futures, indexes and Forex. Prices are provided not by the exchanges. Market makers provide them. Therefore, prices can be inaccurate and differ from actual market prices. These prices should not be used for trading. Fusion Media is not responsible for trading losses that may be incurred as a consequence of the use of this data.

Fusion MediaFusion Media and anyone associated with it will not assume any responsibility for losses or damages arising from the use of this information. This includes data including charts and buy/sell signal signals. Trading the financial markets is one of most risky investment options. Please make sure you are fully aware about the costs and risks involved.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.