On 5 October 2020, the Indonesian Parliament passed the Omnibus Law on Job Creation. Seven out of nine parties supported the bill, which is over 1,000 pages long and amends 79 existing laws. Meant to facilitate investment by adding more flexibility to the labour market and cutting bureaucracy, the law has brought tens of thousands of Indonesians onto the streets to protest against the social and environmental impacts of the law and the lack of civil society involvement as it was drafted (FW 253).
Indonesian forest NGOs are very concerned that the Omnibus Law will drive more deforestation. The final law has not yet been published; already in April 2020, however, the NGO Madani highlighted concerns in relation to articles in the draft law that weaken environment protections and would increase the risk of natural forests loss. According to Madani’s analysis, five provinces would lose all their natural forests due to deforestation if the law is implemented: Riau by 2032, Jambi and South Sumatra by 2038, Bangka Belitung by 2054 and Central Java by 2056. Indonesia would inevitably fail to meet their forest climate commitment (Nationally Determined Contribution (NDC) target). Madani warn that the opportunity afforded by the palm oil moratorium to save 3.4 million hectares of natural forests located within palm oil permit area concessions would be lost − mainly to meet the increased target for domestic biodiesel consumption, but also to meet the growing demands of food consumption, industry and crude palm oil exports.
Investors are also concerned about human rights, environmental and labour consequences, and have written an open letter pointing out the contradictions created by this law, especially in light of growing demand for responsible commodity production and incoming demand-side regulations on imported deforestation. As stated by Mighty Earth, however, “major palm oil traders including Wilmar, Golden Agri, Musim Mas, RGE Group, Bunge, Sime Darby and Louis Dreyfus remained publicly silent about the Bill. Major consumer goods producers including Unilever, Cargill and Nestlé, who have committed to No Deforestation, No Peat, No Exploitation (NDPE) policies, have likewise not expressed concerns about the bill,” calling into question the sincerity of their commitments.
The situation reemphasises the need for robust regulation at EU level that stops products that destroy the world’s forests and violate human rights from entering the EU. The Omnibus Law further casts doubt on the participatory elements of the Forest Law Enforcement, Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA), fundamental to Indonesia’s FLEGT licences. In such circumstances, concluding any trade deal between the EU and Indonesia would appear to endorse a weakening of environmental and social standards.