Medan, Indonesia – For years, Indonesia has sought to position itself as a foreign investment destination, rivaling neighboring Vietnam and Malaysia.
In the year In 2016, Indonesia’s first-term president, Joko “Jokowi” Widodo, announced the opening of dozens of industries to foreign investment in what he called a “big bang” economic liberalization.
Six years later, the Southeast Asian country’s controversial new criminal law – which has been making international headlines since its passage earlier this month due to its ban on extramarital sex – is raising questions about Jakarta’s commitment to fostering an open and welcoming business environment. .
In Indonesia, where a revised criminal law bans swearing, cohabitation, divination and insulting the government, opinion is divided on whether the Jakarta sale will help or hurt the world.
The Indonesian Employers’ Association (APINDO) has raised concerns about several parts of the code, including penalties that have a “wide impact” on corporate crimes and the recognition of customary law.
“The implementation of this customary law for the business sector will create legal uncertainty and cause investors to reconsider investing in Indonesia,” APINDO said in a statement to Al Jazeera.
APNDO said the ban on extramarital sex “does more harm than good, especially in the tourism and hospitality business sectors.”
Other industry figures dismissed such concerns.
“Currently, the government is implementing the new criminal law. Of course, there may be some advantages and disadvantages, but there will be a period of three years before it is implemented in real life,” Clement Gultom, managing director of Boraspati Tours and Travels in Medan, told Al Jazeera.
“Therefore, I intend to choose not to be harsh on the new criminal law,” Gultom said, adding that lawyers and activists could apply for a judicial review through the Supreme Court if necessary.
North Sumatra Chamber of Commerce and Industry chairman Khairul Mahali was similarly upbeat.
“The role of the government is as a regulator and the role of businesses is as an operator,” he said. “We need to support the government and ensure that the new laws are integrated at all levels of government.”
Bodies such as Chambers of Commerce will contribute to smooth business operations by linking foreign businesses with local partners after the code comes into force, said Mahali.
“For now, the business world in Indonesia is untouched and a world of opportunity,” he said.
Revised Code – The code – which was completely revised in 1918 when Indonesia was a Dutch colony – was controversial for years before it was approved, sparking nationwide protests in 2019. As it is now, critics fear it will violate basic human rights and discredit Indonesia. Democratic freedoms.
The changes come as part of Indonesia’s efforts to attract investment, which includes a goal of attracting $89 billion in foreign investment.
Indonesia’s foreign direct investment in the third quarter of 2022 increased by 63.6 percent and reached 10.83 billion dollars, Investment Minister Bahlil Lahadiya said.
China, Japan and Singapore were the biggest sources of investment, driven mainly by the development of resource processing – part of the country’s broader strategy.
Some environmentalists say the revised code, far from convincing investors, will encourage those seeking to exploit fragile ecosystems.
Ari Rompas, a campaigner at Greenpeace Indonesia, said he believed the code was passed to benefit foreign investment and stifle critical voices.
“Investors will be happy because the articles on environmental crimes have been light,” Rompas told Al Jazeera.
Rompas said critics would limit protest and that new laws restricting protest could be used against foreign investment, particularly projects that threaten the environment.
“Local communities and activists are threatened by the potential for criminality if they oppose or criticize projects deemed strategic by the government in collaboration with outsiders,” he said.
“This criminal law is designed to address the colonial legacy of exploiting natural resources, damaging the environment and silencing critical voices in civil society.”
The new criminal law places restrictions on “organizing demonstrations, marches or processions” and punishes anyone “causing public nuisance, trouble or disturbance in the community” with up to six months in prison.
Other Articles Insulting government officials and government institutions is a crime punishable by up to 18 months in prison.
Amnesty International Indonesia director Usman Hamid said the Batang Toru Dam project, a $1.6 billion Chinese-backed hydropower plant run by Jakarta-based PT North Sumatra Hydro Energy, is an example of projects the government wants to protect with the company. Criminal law.
In the year The project, which began in 2017, was controversial from the start because activists said it threatened the area’s Tapanuli orangutan population.
“The law for large investments is aimed at protecting the investment projects of President Jokowi Widodo, including those with Middle Eastern sponsors and those with investments from China,” Hamid told Al Jazeera.
“In the past, protests in various areas have targeted Chinese investment projects in North Sumatra, such as Batang Toru.”
Hamid’s articles designed to quell dissent, critics say, are deliberately too broad to apply to criticism of industries such as the nickel sector.
Indonesia has nearly a quarter of its nickel reserves, which are used in batteries and stainless steel production. Although the country is a leading exporter of nickel, activists have long warned of the environmental impact of mining the metal in large quantities.
Other business observers say the criminal law could deter investors.
Adinova Faury, an economist at the Center for Strategic and International Studies in Washington, D.C., is particularly concerned about the provisions of customary law that allow prosecutions under certain local laws that are not written into criminal law.
“There is a need to look at the relationship between customary law and investment certainty in an area,” Faury told Al Jazeera.
Faury said there have been cases in the past of businesses that have been banned from operating despite having business licenses that conflicted with customary law, and that investors will need more legal certainty after the new code is passed.
“It is important to adjust the investment rules so that there is no confusion among investors,” he said.
