The Constitutional Court has declared numerous provisions of the 2023 Job Creation Law to be provisionally unconstitutional.
The Constitutional Court’s decision casts serious doubt on the future of the reform process, in respect of Indonesia’s hugely restrictive manpower regulatory regime, which reform process was commenced by the former Government of then President Joko Widodo in an endeavour to make Indonesia a more attractive destination for foreign investment.
As the energy, infrastructure and mining industries are major employers in Indonesia, companies operating in these industries (as well as companies operating in numerous other industries that employ significant numbers of workers) may, eventually, be seriously impacted by the Constitutional Court’s decision.
The Constitutional Court’s decision could not come at a worse time for new President Prabowo Subianto given his commitment to deliver annual GDP growth, of not less than 8% every year for the next 10 years, in order to achieve his single most important campaign promise; namely, to make Golden Indonesia 2045 a reality. The last thing the new President needs is for potential investors to start looking elsewhere for business opportunities because of Indonesia’s perceived lack of progress in implementing what were already long overdue and far too modest manpower regulatory regime reforms.
In this article the writer will review the more important aspects of the Constitutional Court’s decision before considering the potential implications of the same for employers, with a particular focus on the implications for employers in the local energy, infrastructure and mining industries.