On the 5th October, the Indonesian House of Representatives approved a new economic recovery law aimed at aiding the country bounce back after months of economic decline following the global COVID-19 epidemic. However, as details of the stimulatory bill have emerged, concerns over its intention to sacrifice the environment in order to restore the countries economic health have lead to a widespread backlash against the move1.
The radical piece of legislation nicknamed the ‘Omnibus Law’, inserts 174 new articles into 79 preexisting laws, including the removal of legal barriers that prevent provinces removing more than 70% of forest cover2. The bill aims at restoring international confidence and investment into the country by propping up the declining labour market and improving the ease of doing business; via the harmonisation and simplification of licensing and regulation3.
One of the most worrying implications of the legislation is the removal of legal protection against the destruction of primary forest cover, leaving the path to extensive deforestation wide open. Furthermore, the Indonesian central government gained the power to approve building works for business and investment in forest areas previously protected against commercial enterprise and destruction2.
Since the announcement of the law it has sparked protests across the country calling for its removal. In Medan, more than a thousand protestors took to the streets in resistance of the new legislation. So far the government has made no move to address the many concerns the Indonesian people, and the global community, have with the dangerous new precedent set by the Assembly 4.
Consequences for future timber trade in Indonesia
The ramifications for future international trade and investment into Indonesia’s forestry sector could be dire. Following the COVID-19 epidemic, many countries have committed to green growth and creating a circular bio-economy by conforming to strict sustainability trade protocols. Following this pro-deforestation law, many investors into the forestry sector will likely shy away from the resurgence of exported timber from the country, attempting to avoid the inevitable future environmentalist backlash against the use of unsustainable wood out of Indonesian woodland.
In fact, the Omnibus law may spark a new wave of anti-Indonesian-timber sentiment among environmentalist groups, resulting in a tightening of already overbearing trade regulations on timber products that constitute the description of a non-tariff trade barrier. Already the law has been denounced by the International Trade Union Confederation due to its ability to “strip away…environmental protection”. 5.
The intention of the Omnibus Law on Job Creation was to improve the countries international competitiveness, reduce red tape and allow the labour market some much-needed flexibility. In reality, the law is reverting the many positive attempts to create green growth in the past decade and particularly damages its future prospects in the timber export market.
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- BBC News., (2020). Indonesia: Thousands protest against ‘ominbus law; on jobs. Retreived from: https://www.bbc.co.uk/news/world-asia-54460090
- Kine, P., (2020) Indonesia’s New Omnibus Law Trades ‘Green Growth’ for Environmental Ruin. The Diplomat. Retrieved from: https://thediplomat.com/2020/10/indonesias-new-omnibus-law-trades-green-growth-for-environmental-ruin/
- McKenzie, B., (2020) Indonesia: The House of Representatives Approves Omnibus Law. Lexology. Retrieved from:https://www.lexology.com/library/detail.aspx?g=325667ec-4f80-4cba-af93-a540842edaa1#:~:text=On%205%20October%2C%20the%20Indonesian,as%20the%20%22Omnibus%20Law%22
- Llewellyn, A., Simangunson, T., (2020) Demonstrations sweep Indonesia over controversial labour law. Alkazeera. Retrieved from:https://www.aljazeera.com/news/2020/10/9/demonstrations-sweep-indonesia-over-controversial-omnibus-law
- International Trade Union Confederation. (2020) ITUC denounces Indonesian government’s ‘omnibus’ law. Retreived from: https://www.ituc-csi.org/indonesia-omnibus-law