Confusing sales pitch of ‘sex ban’ law as Indonesia lures investors | Business & Economics

Medan, Indonesia – Indonesia has struggled for years to present itself as a popular investment destination to rival neighbors Vietnam and Malaysia.

In 2016, during his first term in office, Indonesian President Joko Widodo announced the opening of dozens of industries to foreign investment in what he called a “big bang” of economic liberalization.

Six years later, the Southeast Asian country’s controversial new penal code – which has made international headlines since it was passed earlier this month for banning sex outside of marriage – has sparked interest in Jakarta’s commitment to fostering an open and welcoming business Environmental doubts.

In Indonesia, opinions remain divided on whether a revised penal code that bans blasphemy, cohabitation, witchcraft and insulting the government helped or hurt Jakarta’s sales pitch to the world.

The Indonesian Employers’ Association (APINDO) raised concerns about several parts of the law, including penalties for corporate crimes that would have “widespread effects”, and recognition of customary law.

“For the business sector, the implementation of this customary law will create legal uncertainty and make investors reconsider investing in Indonesia,” APINDO said in a statement provided to Al Jazeera.

APINDO also said banning non-marital sex “does more harm than good, especially for the business sector involved in tourism and hospitality”.

Others in the industry dismiss such concerns.

“Currently the government is still enforcing the new penal code. Of course, there will be some pros and cons, but it will take three years before it is applied in real life,” said Clement Gurtom, general manager of Boraspati Tour and Travel in Medan. told Al Jazeera.

“I would therefore prefer to choose not to be aggressive with the new penal code,” Gultom said, adding that lawyers and activists could apply for judicial review of the law through the Supreme Court if necessary.

Khairul Mahalli, chairman of the North Sumatra Chamber of Commerce and Industry, expressed similar optimism.

“Governments function as regulators and businesses function as operators,” he said. “We need to support the government and make sure the new laws are coordinated across all levels of government.”

Mahalli said institutions such as the chamber of commerce will help connect foreign businesses with local partners and ensure a smooth continuation of businesses after the code comes into effect.

“Currently, the Indonesian business world is unaffected and is a world of opportunity,” he said.

Indonesian President Joko Widodo
In 2016, Indonesian President Joko Widodo announced the opening of dozens of industries to foreign investment [File: Ismoyo/Pool Photo via AP]

The revised code, an overhaul of the 1918 code when Indonesia was a colony of the Netherlands, was controversial for years before its adoption and sparked nationwide protests in 2019. Then as now, critics feared it would violate basic human rights and erode Indonesia’s democratic freedoms.

The changes come as Indonesia has made strides in attracting investment, including a target of attracting $89 billion in foreign investment next year.

According to Investment Minister Bahlil Lahadalia, foreign direct investment (FDI) in Indonesia rose 63.6 percent year-on-year to $10.83 billion in the third quarter of 2022.

China, Japan and Singapore were the largest sources of investment, driven largely by developments in resource processing – part of the country’s broader strategy to add value to minerals.

Some environmentalists say the revised regulations, far from discouraging investors, will encourage those looking to take advantage of fragile ecosystems.

Arie Rompas, an activist with Greenpeace Indonesia, said he believed the code was approved in the interest of foreign investment and to silence critics.

“Investors will be happy because it becomes easier to write about environmental crimes, which means environmental crimes become harder to prove in court,” Rompas told Al Jazeera.

Rompas said the new law, which many critics say will limit dissent and protest, could be used against those who criticize foreign investment, especially in projects that threaten the environment.

“The possibility of criminalization actually threatens local communities and activists if they protest or criticize outside collaborations on projects that the government deems strategic,” he said.

“This penal code seeks to reinforce the legacy of colonialism that exploits natural resources, destroys the environment and silences critical voices of civil society.”

The new penal code places restrictions on “organizing processions, rallies or demonstrations” and includes a prison term of up to six months for anyone found to have caused “disturbance of the public interest, disturbance or communal disturbance”.

Other provisions criminalize insulting public authorities and State institutions, punishable by up to 18 months’ imprisonment.

Usman Hamid, director of Amnesty International Indonesia, said the Batang Tolu Dam project, a $1.6 billion hydropower project funded by China and operated by Jakarta-based PT North Sumatra Hydro Energy, is one that the government wants to protect. An example of such a project. penal code.

The project, which began in 2017, was controversial from the start as activists said it posed a threat to the local Tapanuli orangutan population.

Hamid told Al Jazeera: “For large investments, the law aims to secure the investment projects of President Joko Widodo, including those with Middle Eastern backers and those from China.”

“Protests in different regions in the past have targeted Chinese investment projects, such as Batang Toru in North Sumatra.”

Hamid said articles aimed at combating dissent, which critics say are deliberately written too broadly, could apply to criticism of industries such as the nickel industry.

Indonesia holds nearly a quarter of the world’s nickel reserves, which are used in batteries and stainless steel production. The country is a major exporter of nickel, but activists have long warned of the environmental impact of increasing mining of the metal.

Other business watchers said the criminal law could make investors nervous.

Adinova Fauri, an economic researcher at the Washington, D.C.-based Center for Strategic and International Studies, said customary law provisions that allow prosecution under some local laws that are not codified in the penal code are a particular concern.

“There is a need to study the relationship between customary law in an area and investment certainty,” Faury told Al Jazeera.

Fauri said there had been cases in the past where businesses were not allowed to operate due to breaches of customary law, even though they had a business licence, and investors needed more legal certainty after the new regulations were passed.

“There is a need to readjust investment laws to avoid confusion among investors,” he said.

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