Omnibus Law: “Flawed” Procedure and Bad Impact for Natural Resources Governance

Again and again, public is surprised by passed of the Job Creation Omnibus Law through the 7th Indonesian House of Representatives plenary session on Monday, October 5th, 2020. It seems like repeating bad behavior in decision-making for several controversial laws like the revision of Corruption Eradication Commission Law, revision of Mineral and Coal Mining Law, and revision of Constitutional Court Law. During pandemic covid 19, surprisingly Indonesian House of Representatives speeds up the discussion of decision-making Job Creation Bill where they ignore public protests who urge to delay or cancel that Bill.

Publish What You Pay (PWYP) Indonesia Coalition sees the wave of disappointment, rejection and public anger over the passed of Omnibus Law. It is caused by the process of drafting documents that had been problematic from the beginning, both in terms of procedure and substance.

PWYP Indonesia noted that since the idea for the Omnibus Law was issued by Jokowi, public has been difficult to obtain the Academic Paper and draft of Job Creation Bill. Government tends to be closed and did not provide access for the public to get information and give input, especially during the drafting stage before they submit the bill to the House of Representatives.1 It is worsened by the relatively closed discussion process in House of Representatives-Legislation Body without involving broad public participation. Even in the 1st Level of Discussion and Decision Making, it was known that the discussion was held on weekend night (3/10/2020). It seems like they want to receive minimal public attention and created the impression as an effort to avoid public criticism that is louder, especially from the labors, farmers, fishermans, academics, and environmental activists.

The discussion and passed of the Omnibus Law also deviated far from the mechanism for drafting the Bill as enacted in Law 12/2011 on the Establishment of Laws and Regulation. Some people said that this law is in substance potentially contradicting the State Constitution, especially regarding the purpose of a state which protects all the Indonesian people and their entire native land of Indonesia to advance general welfare as stated in the opening and the body of the 1945 Constitution of Republic Indonesia.

Based on the findings, the Job Creation Law will bring a bad impact on governance of natural resources in Indonesia. For example, in the sector of mineral and coal mining, this law only sealed the passed of Law Number 3 of 2020 that is problematic in procedural2 and substantial, creating criticism and rejection from the public too. Practically, the Omnibus Law agrees with all changes contained in the current Mineral and Coal Mining Law. It only inserted 1 (one) article, named article 128A that talks about an incentive for coal entrepreneurs, and there is 1 (one) article change that is 162 on criminal regulation for the party that disturbs mining business activities.

Article 128A, which is inserted in the Job Creation Law, is a form of over incentive. It is the application of 0% (zero percent) royalty for coal entrepreneurs who applied enhancement of the mining value, which will regulate through a Government Regulation – It should be noted that the government regulation bill that is ongoing could not escape from controversy.3 It is estimated by applied of 0% (zero percent) royalty will impact a negative on the drastic reduction of Natural Resources Sharing Fund (DBH) to the regions.

Meanwhile, article 162 in the Job Creation Law is an article that could increase the potential for criminalization against communities around the mining area and environmental activists. It is worrying that this will lead to a new conflict between communities who disagree with mining activities in an area that is considered detrimental even though they have obtained a permit.

On the other hand, the Omnibus Law is suspected are giving privileges for Coal Contract of Works (KK / PKP2B) holders where contract period will be expired; supporting eliminating criminal articles that could catch state officials when they face problematic mineral and coal mining permits; giving over incentives for the exploitation of natural resources actor without paying attention to aspects of ecological and environmental protection, as well as the development of renewable energy and sustainable economic development.

Hence, Indonesia Coalition thinks that the governance of natural resources in Indonesia will have misfortune by the presence of several articles in the Job Creation Law, especially the regulation that reduces the authority of local governments and eliminates their responsibility in terms of fostering and monitoring mining activities in their regions. This withdrawal of licensing authority from the regions to the center is contrary to the spirit of regional autonomy that has been developed so far and has the potential to lead Indonesia to a centralized state.

The Omnibus Law that designed to provide legal certainty, it could be turned out having the potential to create legal uncertainty by many derivative rules that will be appeared through Government Regulation. Based on Experience, some regulations in the form of Government Regulation are indicated having the potential to violate laws, such as in the energy and natural resources sector which provides leniency/relaxation on the obligation to prohibit exports and the construction of downstream facilities for Mineral and Coal Mining industry which is considered against the Law Number 4 of 2009. Moreover, The Omnibus Law only gives time for the Government to complete all government regulations as its derivative rules within only 3 (three) months (Article 185).

Not to mention, the presence of several articles in the Omnibus Law that change the diction of environmental permits as an official requirement including Environmental and Impact Analysis/Amdal or UKL-UPL to become environmental approval which only needs enclosing the statement of environmental management capability for business actors it potentially will create new problems; reducing the norms of absolute liability and corporate criminal responsibility; removing the rights of civil society and environmental organizations to sue about environmental damage, and there is no affirmation about easiness public access on environmental feasibility.

Therefore, it is concluded that the problematic articles in the Job Creation of Omnibus Law that is recently passed will not only harm the natural resources sector but in many other sectors. Thus, in line with the wave of public criticism that continuously voiced by various groups, PWYP Indonesia declares REJECTING the Omnibus Law of the Job Creation Law and urges President Jokowi to issue Regulation in Lieu of the Law to ensure better governance of natural resources in the future.

Contact Person:

Aryanto Nugroho
National Coordinator of Publish What You Pay (PWYP) Indonesia

aryanto@pwypindonesia.org

Publish What You Pay Indonesia Coalition:

  1. Forum Himpunan Kelompok Kerja-30 (FH Pokja-30)
  2. Forum Indonesia untuk Transparansi Anggaran (FITRA)
  3. Forum Indonesia untuk Transparansi Anggaran (FITRA) Jawa Timur
  4. Forum Indonesia untuk Transparansi Anggaran (FITRA) Riau
  5. Forum Komunikasi Pemuka Masyarakat Riau (FKPMR)
  6. Gerakan Rakyat Anti Korupsi (GERAK) Aceh
  7. Indonesia Parliamentary Center (IPC)
  8. Indonesian Center for Environmental Law (ICEL)
  9. Institute for Ecological Studies (INFEST)
  10. Instutute for Essential Service Reform (IESR)
  11. Lembaga Pemberdayaan dan Aksi Demokrasi (LPAD) Riau
  12. Lembaga Pengembangan Masyarakat Pesisir dan pedalaman (LePMIL)
  13. Lembaga Pengembangan Masyarakat Swadaya dan Mandiri (GEMAWAN)
  14. Lembaga Studi dan Bantuan Hukum (LSBH) NTB
  15. Masyarakat Transparansi Aceh (MaTA)
  16. Perkumpulan Terbatas Pengembangan Masyarakat dan Konservasi Sumber Daya Alam (PERDU) Manokwari
  17. Perkumpulan Ide dan Analitika Indonesia (IDEA)
  18. Perkumpulan Padi Indonesia
  19. Pusat Studi Kebijakan Publik dan Advokasi (PUSAKA) Sidoarjo
  20. Pusat Studi Pemberdayaan Anak dan Perempuan (PUSPA) Indonesia
  21. Pusat Telaah dan Informasi Regional (PATTIRO)
  22. Pusat Telaah dan Informasi Regional (PATTIRO) Banten
  23. Solidaritas Masyarakat untuk Transparansi (SOMASI) NTB
  24. Swandiri Institute
  25. Transparency International Indonesia (TII)
  26. Wahana Lingkungan Hidup Indonesia (WALHI) NTB
  27. Wahana Lingkungan Hidup Indonesia (WALHI) Riau
  28. Yayasan Akar Bengkulu
  29. Yayasan Swadaya Mitra Bangsa (YASMIB) Sulawesi

  1. https://pwypindonesia.org/id/omnibus-law-dan-catatan-proses-perumusan-undang-undang-di-sektor-pertambangan/
  2. https://pwypindonesia.org/id/transparansi-dan-partisipasi-publik-dalam-revisi-undang-undang-pertambangan-mineral-dan-batubara/
  3. https://katadata.co.id/sortatobing/berita/5f60a2e47cc5f/pemerintah-didesak-batalkan-pengesahan-rpp-pertambangan

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