Indonesia’s Joko Widodo insists protests over new laws won’t stand in the way of reforms
- As Widodo prepares to be sworn in for a second five-year term later this month, he faces an early test of his authority with plans to overhaul the nation’s criminal code
- The legislation, which would among other things infringe on gay rights, limit free speech and punish sex outside marriage, has been criticised as a threat to Indonesia’s democracy and foreign investment
“Indonesia is a democracy,” the president, known as Jokowi, said during an interview in Solo in Central Java on Wednesday, noting he had the authority to push through his reforms. “If people want to express their opinions, they can, but the most important thing is no anarchy, no riots, no destroying public facilities.”
Widodo noted there had been protests when he was mayor of Solo and governor of Jakarta.
“They were normal,” he said. “As president, there are protests in front of the palace too. Sometimes I ask them to come in and I listen to what they want to say. Sometimes I don’t.”
Pressing ahead with reforms
Businesses have long complained that generous severance packages, a complex minimum wage system and restrictions on hiring and firing workers make it difficult for them to expand operations.
“Every year there are 3 million new workers in the job market,” Widodo said. “They must be given room to enter the job market. Second, we want to address investors’ complaints. We have to revise the law and we hope that more investment will create competition among companies to get better workers.”
Indonesia restricts foreign investment in a number of industries from banking to brewing. A plan announced back in November to revise the limits and open up some sectors to as much as 100 per cent foreign ownership was delayed following a backlash from local businesses.
The president on Wednesday said he would allow 100 per cent foreign ownership in sectors such as health and education in special economic zones. He also plans to create an “apparel zone” in Central Java to build on the key export industry that already exists in the province, and allow 100 per cent foreign investment in the sector.
Relative to the size of its economy and population, Indonesia attracts little foreign direct investment. In a recent World Bank document presented to Widodo, none of the 33 Chinese companies that announced plans to set up or expand production abroad between June and August chose Indonesia. They preferred locations such as Vietnam and Cambodia.
“We compete against other countries in attracting investment, to create jobs,” Widodo said. The two main complaints he hears from investors are regarding employment in labour-intensive industries and licensing rules, he said. “We will work on these two as soon as possible.”
More benefits from natural resources
Although he is not yet considering banning shipments of crude palm oil, the prospect of more domestic processing and potentially lower exports would have a profound impact on the global market.
“We want crude palm oil to become processed goods. Why not? Or jet fuel or cosmetics, soap,” Widodo said. “The direction we’re going is we want to build a semi-processed or processed goods industry or downstream industry. No longer raw materials, we want added values.”
“We want to see how industrialisation is in Germany, so can use it as an example,” he said. “We can also take a look at China. We want Indonesia to have a different type of industrialisation because Indonesia has different raw materials.”
Indonesia’s economy is projected to grow at its fastest pace in seven years in 2020, despite a deteriorating global outlook and rising risks of recession abroad. The economy is forecast to add 5.3 per cent next year, according to assumptions approved by the Indonesian parliament last week.