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Indonesia’s omnibus law dilemma: Favorable or misfortune?

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Image source: industriall-union.org

The wave of protests from community elements, workers, students, academics and activists against the legalization of the ‘Omnibus Law on Job Creation Bill’, is entering its peak on October 8, 2020. The omnibus law demonstration was not only held in Jakarta, but also in major cities across the country.

The masses across the region expressed disappointment by calling for a ‘motion of no confidence’ against the central government and the Indonesian Parliement (DPR) for betraying the people by issuing regulations that were more beneficial to entrepreneurs and investors, but not for the people and the working class.

Crowds from various regions expressed their disbelief in the parliament and Joko Widodo’s administration for the legalization of the Omnibus Law. Demonstrators rallied since the ratification of the Omnibus Law on Job Creation Bill, Monday (5/10), and stated that they demanded the state to revoke the regulation which was considered to be tormenting to the people.

The question is, who benefits and loses? Why is it that the Job Creation Bill (according to the government) which is projected for the development of the people’s livelihood will result in massive protest?

Pros

The bill aims to loosen up Indonesia’s complex business, labor, and environmental legal network in an effort to attract investment and boost the economy. In an interview, President Joko Widodo told the BBC the law was about opening up the economy to more foreign investment.

“We want to simplify the [process] licensing and bureaucracy, we want speed, so we need legal harmonization to create fast services, fast policy making, so that Indonesia can respond more quickly to any changes in the world,” he said. Indonesia’s economy shrank 5.3% in the second quarter of this year. Meanwhile, Vietnam, which reported economic growth during April-June 2020, amounted to 0.36%.

The bill makes significant changes to Indonesia’s labor regulations. This removes the sectoral minimum wage, supporting the minimum set by regional governors. This will reduce severance pay to a maximum of 19 months of salary, depending on how long the employee has been in service. Previously, the maximum salary was 32 months.

However, the new government fund will provide an additional six months of wages for the new unemployed. The allowed overtime will be added a maximum of four hours in one day and 18 hours a week. Businesses will only be required to give workers one day off a week, not two.

Outsourcing restrictions have also been reduced, as have restrictions on the jobs in which expats can work. The law also relaxed environmental standards, only forcing businesses to submit environmental impact assessments if their project was deemed high risk.

The bill is expected to create nearly three million jobs for young people who have started looking for work and the six million people unemployed due to the Covid-19 pandemic. Although Indonesia’s ranking in the World Bank’s Ease of Doing Business index has improved significantly in the past five years, Indonesia’s ranking has remained stagnant at 73 in 2019, lagging behind Vietnam, which is ranked 70th.

Cons

The Omnibus Law was drafted and discussed in a hurry, the drafts were “kept secret”, and forced to be included in the national legislation priority program (Prolegnas) and the DPR plenary session. The authorities seems unable to stop the stench of capital interest facilitated by the Omnibus Law. The pretext of simplifying, streamlining, and eliminating overlapping regulations and addressing investment constraints is a reflection of the government’s compliance with free market power or neoliberalism.

Since the Keynesian policy was unable to overcome the economic impasse. Neoliberalism was introduced as an alternative, answered the challenges of the recession of the 1980s, and until now it has become the dominant political economy idea and movement. There are several proposals to be put forward, such as securing state intervention on the market, protecting and guaranteeing private property rights, national security and defense, enforcement of contract-based laws in order to allow the market to take advantage of accumulation.

This view clearly exposes a paradox. On the one hand, the promise of prosperity is inversely related to neoliberal policies that facilitate the institutional framework for the sake of accumulation. The reality of the widening gap between “rich” and “poor” is the logical implication of the savage of accumulation which allows the concentration of capital to occur in the hands of a few. Regardless of the market as the most effective and efficient entity, the market has no commitment to socio-ecological problems.

The plan for setting hourly wages and minimum wages leaves at least two problems. First, workers have the potential to receive a reduction in wages if they work not according to the time set by the company. Demands for producing commodities in a certain amount during a certain period of time are squeezed by the disappearance of several leave permits which have the potential to decrease labor productivity. Second, the minimum wage in the global sweep regulation does not reach workers in the informal sector. This issue reflects the way in which the authorities negate the interest of the working class.

This Omnibus Law systematically weakens the working class. There is no room for workers to raise their bargaining position. This is exacerbated by the presence of workers, who have not yet been absorbed by the industry, lining up for work when the industry needs them. This dire condition was ignored by the government at the expense of the interests of the working class through cheap wages and long working hours, solely to satisfy the appetites of investors and oligarchs.

Currently there are still 1% of Indonesians who control 50% of national assets or if it is increased, there are still 10% of Indonesians who control 70% of the national wealth so that the remaining 30% of assets are captured by 90% of the Indonesian people.The history of human society attests to this. Freedom without equality for those who love and equality without freedom is impossible, as well as a justification for slavery.

The promises of welfare echoed by neoliberalism have almost never been realized. The opposite is true: the worsening inequality between “rich” and “poor”. Since the neoliberalism experiment was first carried out by the Soeharto’s administration during the New Order regime and continued in the Reformation Order, welfare has only been a “neoliberal utopia.”

What should be underlined is that the Omnibus Law is also destroying the collective solidarity of the working class. As reflected in the attitude of the working class in responding to this policy, there are parties who firmly reject it and some are still open to compromises. Although the fragmentation of the working class is nothing new, the existence of the Omnibus Law has only made it worse.

The government’s ambition to smooth out investments is at the expense of humans and the environment. The layered oppression experienced by the working class is exacerbated by allowing corporations to exploit nature in such a way only for profit in the hope that national economic growth statistics can improve. The utopia of the free market which is believed by those who benefit materially as well as those whose existence is legitimized by this understanding has forced them to become slaves who always serve the power of the free market that promises profit.

And lastly, the Omnibus Law is an irrationality of capital justice that politicians and state officials try to rationalize in such a way that the abnormal situation (oppression) experienced by workers as a result of the policy is neutralized into something normal.

Southeast Asia

From October to October: Youth and politics in Thailand

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When I think of the 6th and 14th of October, I think back to my years as an elementary school child, when my parents would take my sister and I to events commemorating those days at Thammasat University. At those events, we would meet people who were trying their best to keep the stories alive, keep the history going, so that no one would forget what happened in Thailand.

October was a month that made me feel like I was living in a parallel world; outside of these events, it seemed as if the nation had completely forgot what had happened. None of my friends understood what was going on. I think I only had two history teachers ever make a comment about the 6th or 14th of October.

It was a month of great importance for my father. Every year, as we got closer to those dates, he would start talking about the events. He would give interviews, be involved in talks and lectures and projects, and yet, it seemed as if absolutely no one else in the country had any clue what was happening.

He asked us every year if any teacher or text book mentioned what had happened in October, and every year, the answer would be the same: no.

Sometimes I worried it hurt his feelings, but he never deterred. It seemed, at moments, he and his friends were speaking into an empty void. But one year, when I was in high school, a middle school student attended one of my dad’s lectures and told my father he was interested in learning more about October, and why it was important to Thailand. My dad talked about that student for days after, even encouraging me to add him as a friend on Facebook.

Years later, when I look back to that time, I realize the reason he kept on pushing was quite simple: if he could teach one young person about what happened, if he could get one person to even care about October, if he could make sure younger people kept learning about it,it would be successful in paving the way for change.

If he had ever feared that the movement would not get passed on to the younger generation, this past month has proved him wrong.

The power of young people has always been underestimated in Thailand. But there is nothing more powerful than the thought of having no say in our future, of seeing other countries move forward in ways we can’t because we haven’t faced the past. There is nothing more frustrating than asking for the chance to draw up what the future should look like for us and getting our requests shot down.

But the baton, it seems, hasnow been passed down from the time my father was speaking into the void; it just kept getting passed around without a receiver. Now, the youth are ready to take on the task of helping others face the past. We are ready to hear about what has had happened in our country’s history, and take on the demands of the youth of the past and move it forward.

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Southeast Asia

Crisis and Future of the Regime Stability in Southeast Asian Countries

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The world has encountered a crisis several times. In facing a crisis, every nation’s leader will need to strive to prevent the existing disaster from having a major impact on the country’s economy. This is because the economic crisis can have consequences for the reputation and the stability of the political regime itself.

Unlike the crises caused by unregulated economic practices such as during the Great Depression in 1929 or the Global Financial Crisis in 2008, the catastrophe that the world currently confronting today is prompted by the COVID-19 virus. This new type of disease has eventually sparked into the global pandemic and already created tremendous negative disruption toward economics and businesses around the world.

Of course, the panacea for this problem is not easy since it takes the extraordinary capability of the state to bear with a load of health costs and prevailing economic burden to its society.

Most of the countries having a really hard time coping with this ‘black swan’ event. While, for some emerging economies with weak public health capacity, and slow policy process has already struggled with the socio-economic impact of the virus.

In this backdrop, although countries in Southeast Asian (SEA) regions have already made an impressive economic achievement post-Asian Financial Crisis in 1997, they have to swallow the bitter pill again as their economy agonized from this significant blow.

The countries within the ASEAN have suffered a great economic loss due to the pandemic. According to the latest forecasting report by the Asian Development Bank (ADB),the GDP growth rate of Indonesia and Laos has been contracted to minus 1 percent and 2.5 percent respectively. Other nations such as Cambodia, Malaysia, and Singapore have been predicted to befall averagely under minus 4 percent. While the Philippines and Thailand have even major severe shocks as their economy sharply contracting in excess of minus 7 percent. Only several states such as Vietnam, Brunei Darussalam, and Myanmar have performed slightly better.

This phenomenon is indeed very upsetting, especially because these countries are highly dependent on foreign investment, trade, and the tourism sector as the main engine to drive economic growth respectively.

The tricky part comes when the state cannot provide its citizen with adequate support and accountability. Apart from the debate about which ideological system is best in dealing with a pandemic, we need to understand well that political turmoil is often triggered by the inability of the state to meet the needs of its people. The public health emergency coupled with the economic crisis, and problematic policy selection can swiftly turn into unrest since the society vigorously looking for justice and protection over their wellbeing.

Compared to other ASEAN member states, Vietnam and Singapore are effectively tolerate the impact of turbulence because of their impressive management of public health systems. While other nations in the region seem to have different stories.

In Indonesia, regime stability has been affected by COVID-19. From the beginning of the outbreak, among other ASEAN member states, Indonesia was the latest one who got struck by the virus. But it turns out that Indonesia becomes a country with the largest infected cases in the region. The lack of government coordination and assistance in tackling the pandemic has made the economic condition of the country worsen. In addition, the most recent enactment of the omnibus law of job creation that predominantly in favor of businessmen and investors has triggered the wide-spread protest toward the government across the archipelago since early October.

Likewise, the Philippines also has to face the fatal economic damage caused by the pandemic as the unemployment number and poverty rates have significantly risen. Despite the government’s extreme militaristic measures to contain the pandemic, the number of infected cases and death ratio still upsurging, second only to Indonesia. Yet, this has sparked both national and international criticism on President Duterte’s repressive approach.

In Malaysia, the government must engage with the second wave of the pandemic. After generally succeed in the first attempt to tackling the outbreak, the infected rate has steadily increased particularly in Sabah, after holding local elections on 26 September. Apparently, the political upheaval began to appear when Prime Minister Muhyiddin Yassin insist to put the country under a state of emergency. Although in the end the proposal was later rejected by Malaysia’s King Sultan Abdullah, the declaration to suspend the parliament was roundly condemned by opposition figures in the country and also mounted concern among Malaysians.

Amongst other countries in the SEA region, Thailand currently in the state of a serious political crisis mode provoked by a series of anti-government demonstrations. The Thai people demanding to reform the Thai constitutional monarchy and removal of Prime Minister Prayuth Chan-ocha from his office. This situation has made Thai authorities announced the country to entered the emergency decree. Though the protester vigorously attacked the government solely for the political reform motives, the issue of the economy has virtually played a quite larger part. Previously, the country’s strategy in responding to the outbreak of the disease domestically had relatively efficacious. However, the long period of the lock-down policy has brought down deep frustration on the government since the economic inequality, poverty rate, and desperateness for the job among the young generations have ominously increased.

Conclusively, the pandemics of COVID-19 have become an interesting setting for testing the stability of the political regime in ASEAN. The virus has considerably contributed as a catalyst for the economic crisis. Clearly, the pattern of political turmoil and civil disobedience has gradually begun to appear as the countries started to be overwhelmed by the collision of the crisis.

It’s no doubt that Indonesia and the Philippines will deeply fall into another economic recession which can potentially ignite another massive civil unrest toward the regime. Malaysia similarly could face another heated political situation. Yet, the country’s capacity to handle the crisis still can make the regime to be relatively stable. While Thailand on another hand will face difficult circumstances. As the public has already tired of their flawed constitutional system, civil unrest will most likely continue to take the place. Consequently, the future political-economic outlook of Thailand in the near future will somewhat look worrisome.

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Southeast Asia

Quad, Quad Plus, and the Indo-Pacific: The Core and Periphery

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Indo-Pacific has been seen as one construct which identifies US strategy and brings in subscribers to the concept; thereby adding value to this concept. At the same time, it has been working on defining political, economic and security contours of this geo-political imagination. Indo-Pacific has defined as the fusion of two oceans -Indian and Pacific. It has brought the regional powers-India, Japan and Australia within the whole narrative. There are issues related to the Indo -pacific and how it will address security and political concerns but given the fact that Chinese aggression has brought in more countries into its fold, the idea is gaining momentum.

The pronouncements made by the UK, France and Germany as their approach towards Indo-Pacific shows that there is synergy which might emerge between the Euro- Atlantic and the Indo-Pacific. Indian Prime Minister Narendra Modi did propose that Indo-Pacific should become an inclusive concept and opened a window for China to be included into the configuration. However, this was never reiterated by Modi in the subsequent speeches and it seems that the bon homie between the two Asian powers dissipated because of Chinese aggressive moves in the Indian borders.

The evolution of Quad 1.0 which gave heft to Malabar exercises, and involvement of Singapore and Australia into larger scheme of things dissipated as the Australian government withdrew in later editions after succumbing to Chinese angst. The Quad 2.0 which gained steam in the early 2018 has now come a full circle with Australia again joining the Malabar exercises scheduled to be held later this year in the Indian Ocean. The latest approach has brought strategic momentum. The Quad 2.0 has outlined few of the larger objectives during the Tokyo submit earlier in October, and it is seen that in terms maritime security, space, cyber and encrypted communication networks there are possibilities between the four countries. India has already signed the BECA agreement and there is a possibility of greater understanding in technology sharing and intelligence domain between the four partners.

The Quad 2.0 is seen as having teething problems because of the changing political dispensation in Japan and the US while India and Australia are steadfastly showing their commitment to the cause. However, the Quad needs a blueprint and also a joint status paper which should outline the utility and purpose of this formation. With ASEAN the question of centrality has been resonating and even the former Singapore Permanent secretary has stated that Laos and Cambodia are unnecessary baggage in the ASEAN homogeneity and consensus as the two countries has been acting as surrogates of China. The problem of placing ASEAN centrality in larger objectives of Quad and Indo-Pacific would grow in future.

There have also been proposals of Quad plus which should include South Korea, Vietnam and New Zealand for the purpose of expanding the logistics and support network, and undertake concerted measures for protecting maritime commerce and build institutional linkages. While Quad Plus identifies the new players into this circuit but it fails to recognize Indonesia and other such regional players which might be useful in meeting the long-term objectives.

One of the aspects which has been highlighted that Indo-Pacific should work in the field of economic integration and bring about various regions such as South Asia, Southeast Asia into one umbrella of Indo-Pacific Economic Corridor. While digital and scientific cooperation has been envisaged but concerted plan of action for building resilient supply chains among the subscribers of the Indo-pacific might be a good initiative.

Along with Quad and Quad plus there are many trilaterals which have been taking shape and have made a unique strategic matrix. The trilaterals which have been taking shape include France, Australia and India. The other two trilaterals are Track II -Australia, Japan and India, as well as India, Australia and Indonesia, thereby expanding the expanse of the trilaterals acting as nodes in the overall edifice. Therefore, if Quad plus expands and Indo-pacific geographic outlines remains as envisaged then there would be a structural overlap between the two. India within its Ministry of External Affairs has already commissioned a new Oceania division which would look into the work of divisions such as ASEAN, Indo-Pacific and the Southern Asia. 

The need of the hour is to develop the priority areas for the Quad.  One of the areas that Quad can develop capacities is developing maritime security architecture with willing subscribers and logistics providers. Cyber is another area where Quad can develop joint partnerships and also support building better digital architecture. The important aspect is that within maritime security architecture Quad need to develop Quad grid which should integrate ports with facility for the navies of Quad countries to congregate, work out interoperability, and develop cooperation in maritime domain. This should include maritime theatre awareness and conducting joint Humanitarian Assistance and Disaster Relief (HADR) operations. The maritime Quad grid can comprise of Djibouti, Diego Garcia, Andaman, Darwin, Guam and Okinawa-the big ‘W’ in the Indo-Pacific. Also, developing cooperative mechanisms in sectors such as rare earths, interlinking defence research networks and securing channels of communication through sharing of satellite data would give required teeth to the Quad.

As already discussed, it is likely that Quad plus and Indo-Pacific would run parallel and even develop symbiotic relationship which might expand in political, economic and strategic domains. Quad would address defence and strategic requirements while a possible Indo-Pacific Regional Cooperation institution would address political coherence. In economic field the inclusion of India in Asia-Pacific Economic Cooperation (APEC) would help in transition of Asia-Pacific Economic Cooperation to Indo-Pacific Economic Cooperation. While these propositions are there on the table but the realization would be critical to make these ideas and geopolitical imaginations get a concrete shape.

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