When President Joko ‘Jokowi’ Widodo pledged reforms to attract greater investment at the October 2019 inauguration ceremony for his second and final term, we predicted that his plans would encounter serious difficulties.
A law on job creation passed in October 2020 is a key component of the reforms. In November 2021, the Constitutional Court ruled that the law would be rendered “permanently unconstitutional” unless the government revised it within two years.
Why do you need to know about the fate of Jokowi’s reform?
It is clear that Indonesia will punch below its weight economically unless it improves the business environment. The job creation law, which extends from land procurement to labour regulation, is designed to remove obstacles to investment, but critics say it undermines environmental protections and workers’ rights. As we predicted, the rush to pass the legislation prevented adequate scrutiny of its weaknesses. How the government handles the revision process will be a key test of its ability to balance competing interests as well as its capacity to implement sweeping reforms that favour investors.
How do we help our clients?
The Oxford Analytica Daily Brief delivers timely, impartial and actionable analysis of emerging trends and developments. Publishing every business day, we analyse the most important topics in all areas of the global political economy. On Indonesia alone, our clients received 66 in-depth analysis and 201 quick response updates between January 2019 and May 2022.
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Through daily dissection and analysis of developments in global politics, macroeconomics and the political economy, the Oxford Analytica Daily Brief offers qualitative predictions of the impact of events ‘just over the horizon’.
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