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Company News

FACTBOX-What is being voted on in Indonesia's flagship jobs bill?

Oct 5 (Reuters) - Indonesia’s parliament is set to vote on a flagship job creation bill on Monday aimed at improving the investment climate and streamlining business rules in Southeast Asia’s biggest economy.

Some of its provisions have been controversial, especially regarding the environment and changes proposed to the 2003 labour law which trade unions view as being too pro-business.

Here are key elements of the bill agreed by parliament’s legislation committee, according to a draft of the bill.

LABOUR REFORMS

Mandatory severance benefits paid by employers will be cut to 19 times monthly wages from 32 times, in line with the earlier proposal and with the government partially funding the shortfall by paying six times monthly wages.

Minimum wage limits at city and district levels stay, with annual rises tied to economic growth and inflation, but some sectors will lose special treatment.

Originally, the government had proposed setting minimum wages only at the provincial level, with increases pegged to economic growth, and for labour-intensive sectors to set their own minimum wages.

Mandatory paid leave for family weddings, baptism, childbirth, bereavement and menstrual leave for women will be dropped, so employers and workers could fix their own terms.

Strict rules on outsourcing will be relaxed and a rule on a three-year maximum term for contractors scrapped.

Work overtime can be increased to four hours a day from three now.

BUSINESS PERMITS AND REGULATIONS

Businesses considered low-risk now only need to register before they begin operations, while medium-risk ones have to follow a set of standards and only high-risk investments must obtain a permit.

Environmental studies are only required for investments considered to be high-risk.

The process for investment permits for provinces and local governments will be standardised, with the central government able to take it over in some cases.

The central government will take over the procedure for investment permits to projects considered of national strategic importance.

SOVEREIGN WEALTH FUND

The bill lays the foundation for the formation of a Sovereign Wealth Fund, which should have at least 15 trillion rupiah ($1 billion) in cash as initial capital.

LAND BANK

The government can set up a land bank and manage this to acquire land for public interest and redistribute the land.

NEGATIVE INVESTMENT LIST

The bill paves the way for reforms of the so-called “negative investment list” of sectors in which foreign participation is restricted or limited.

A separate government regulation will detail the sectors to be opened up. Ministers have said that after passage of the bill, only a handful of restricted sectors will remain, such as gambling, arms and narcotics. ($1 = 14,790.0000 rupiah) (Reporting by Gayatri Suroyo, Maikel Jefriando and Tabita Diela; Editing by Ed Davies)

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