Indonesia Corona Virus Update #33 October 12, 2020
Cumulative number of reported cases: 333,449 (as of October 12 )
Rupiah to US$14,746
Jakarta Stock Exchange Index: 5093
Active COVID cases (new cases minus deaths and recoveries) growth grew 3% week-on-week, same as last week.
Jakarta’s governor, Anies Baswedan, eased restrictions for dining at restaurants as COVID new case numbers flattened. Under the eased rules, restaurants and cafes can serve dine-in customers but limit their capacity to 50 percent and impose strict health protocols. Wet markets, shopping malls, places of worship, offices, barbershops, museums, retail stores, indoors, and outdoor sports centers, except the swimming pools, can also open at half of their capacities.
Indonesia has inked a deal with British drug maker Astra Zeneca to purchase 100 million does of its COVID vaccine.
The US rescinded the travel ban it placed on former Indonesian general, Prabowo Subianto, instituted after an internal Indonesian military tribunal dismissed him for human rights excesses in East Timor during its referendum on secession in 1999. Now Minister of Defense, Prabowo will visit the US October 15-19 for talks with his US counterpart Mark Esper.
Indonesia has completed negotiations to establish a travel corridor with Singapore to facilitate urgent diplomatic missions and essential business trips between the two countries amid the ongoing COVID-19 crisis.
Jobs Bill Protests- Protests over the new Omnibus Law on Job Creation by students and workers, some turning violent, rocked cities across Indonesia. Major concerns were environmental protection, minimum wages, job security, and human rights. Misinformation on issues such as leave time for pregnancy and temporary work contracts, perhaps spread by insufficient communications from the government, as well as general dissatisfaction with perceived roll backs on corruption and democracy, led to remarks from President Jokowi defending the law. The protests are likely to lead to a spike in COVID-19 cases. In his first public comment on the passage of the Job Creation (Omnibus) Law, President Joko “Jokowi” Widodo said that criticism of the law is merely based on “disinformation and hoaxes spread through social media”. The President claimed that various “allegations” made against the law, such as claims that it removed employees’ rights to leave and social security, including retirement benefits, were inaccurate.
Employers Defend New Law– Indonesian Employer Association (Apindo) chair Hariyadi Sukamdani said on Friday that issues preventing businesses from employing more people formed the background of the drafting and deliberation of the omnibus law. He said the legislation aimed to redress a long-term decline in employment. “In the span of 17 years since Law No. 13/2003 on labor was passed, a significant decline in employment has taken place,” he said in a virtual discussion held by the association. “This is in contrast to the growth of our workforce, which has increased by more than 2 million people every year.”
Comments of Former Finance Minister: “The previous Labor Law was good for the trade unions – if you had a job already, the
law was good. For a worker employed for 10 years, if the company fires him they have to pay 32 months [of severance]. This acted, in effect, as a high labor tax. And therefore many people have been unable to get into jobs – and if you do not work in the labor market as an insider, you will work in the informal sector, where there is no protection, and most of the workers are women.” (BBC interview, October 8)
Key Features of New Law
- Expat Taxation and Visas Revised: Memorializes a ministerial decree eliminating the worldwide income basis for the taxation expatriate workers. Some details are forthcoming but it appears the new law allows just local or territorial income for the first 4 years. The 2011 Law on Immigration was changed to allow visas and stay permits to be issued electronically. Visitor visas can be issued for “pre-investment” activities.
- Severance Payments: Depending on a worker’s tenure required severance payments are reduced from 13 to 57% with the average being 50%.
- Women’s Health- Contrary to press coverage, the new law does not change leave time for menstruation and pregnancy.
- Environmental Permits: The law simplifies procedures for obtaining permits (AMDAL)
- Conversion of Forests: A section of the new law revises the 1999 Forestry Law. Previously Parliamentary approval was required to release conservation forests for commercial use. Now the authority is vested in the President or Minister.
- Land Acquisition for Public Infrastructure: Numerous regulatory changes begun in 2015 to speed the clearing and acquisition of land for public infrastructure have been formalized in the new law.
- Sovereign Wealth Fund: The law enables the government to develop an investment fund for public sector activities of up to $15 billion. Indonesia has pledges from several countries, including the US.
- Small Business Startups: The bill simplifies the process of applying for a business permit through the use of a single system: Online Single Submission (OSS).
GSP Renewal- On last week’s export promotion webinar, organized by Indonesia’s Ministry of Foreign Affairs and The US Committee of the Indonesian Chamber of Commerce (KIKAS), Deputy Foreign Minister Mahendra Siregar said that Indonesia’s Ambassador to the US, Muhammad Lutfi, would be delivering a letter from Coordinating Minister for Maritime Affairs and Investment to the USTR, outlining how the Omnibus Bill, among other measures, satisfied US concerns that surfaced during the GSP renewal process (market access, sectors open for investment). GSP is a set of trade benefits for emerging economies covering manufactured products.
Aluminum Sheet: The US Commerce Department included Indonesia in a list of 18 countries dumping aluminum sheet. Although the determination was only preliminary tariffs have been raised and a final decision will be rendered in February 2021.
(sources: International and Indonesia news media, Bali Update (from balidiscovery.com), Reformasi Weekly)