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Bloomberg
Indonesian lawmakers agreed to prioritise bills related to jobs, taxation and the relocation of the capital, key to president Joko Widodo’s efforts to boost investment, accelerate growth in Southeast Asia’s largest economy.
The three omnibus bills are among the 50 priority legislation for debate and approval this year, Deputy Speaker Muhaimin Iskandar told a plenary session of the parliament in Jakarta on Wednesday. The priority bills also include one related to the Financial Services Authority, the banking and markets regulator.
Jokowi, as Widodo is commonly known, has put the omnibus bills on job creation and taxation at the top of his second-term agenda as he looks to stoke economic growth.
The bill on job creation will revise 79 separate existing laws and 1,244 clauses and will overhaul Indonesia’s labour legislation, make it easier for companies to secure permits, and relax foreign ownership rules.
The proposed legislation on job creation has been delayed several times already and has run into resistance from labour unions, which called for nationwide protests. The bill on taxation will allow the government to slash the tax rate on corporates to 20% in phases from 25% now.
The new bill will also pave the way for the abolition of dividend tax if it’s reinvested and also cover tax breaks extended to various sectors, according to the finance ministry.
The parliament will also need to sign off on the bill seeking to move the nation’s administrative capital to Borneo island to allow Jokowi’s administration to begin construction later this year. The yet-to-be-named capital will be built at an estimated $34 billion as the president seeks to decongest a sinking Jakarta.
Indonesia has identified about 256,000 hectares of land on the island of Borneo — about four times the size of Jakarta. Regular flooding in the Jakarta metropolitan area, home to almost 30 million people, and the need to spread economic growth beyond the main Java island have prompted Jokowi to fast-track the capital relocation.