Environmentalists in Indonesia are calling for the reversal of a controversial law aimed at job creation because it is seen favouring business interests at the expense of the environment and labour.
Indonesia, the world’s biggest producer of palm oil and nickel ore for electric vehicle batteries, has forests bigger than any outside the Amazon and Congo, and environmentalists say the country’s abundant natural reserves could be exploited under the new law.
The reforms are contained in a so-called “omnibus” bill of changes in more than 70 laws, which allowed parliament to vote in a single swoop and pass the measure on Monday.
Thousands of people took to the streets of cities across Indonesia over the past three days, part of protests and national strikes against the law.
The government says the law is needed to improve the investment climate and create jobs in Southeast Asia’s largest economy. It says the environment will be protected.
The legal changes will make AMDAL and environmental permits more readily available, decrease the country’s threshold for its minimum forest area, and weaken penalties for forest fires and dumping toxic waste.
Banks like Citibank and ANZ say if the new jobs law is implemented well, there will be a better investment climate for Indonesia.
However, 35 global investors managing $4.1 trillion in assets have warned the new law may backfire in light of investors’ growing desire for environmental protections.
“Efforts to stimulate foreign investment by… easing restrictions on clearing land in palm oil concessions, are counter-intuitive,” said a spokesman for Sumitomo Mitsui Trust Asset Management, part of the alliance of investors.
Their opposition to the law however, does not mean they would dump Indonesian assets they hold, but the law could lower Indonesia’s market attractiveness.
Satu Kahkonen, World Bank Country Director Indonesia and Timor Leste, said in July that the reforms would “move Indonesia’s environmental legislation further away from international best practices and this is not helping Indonesia”.
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