Seminar tears deregulation package to pieces

JAKARTA (JP): A seminar of the Indonesian Legal Aid Foundation (YLBHI) yesterday scrutinized the government's controversial economic deregulation package opening the flood gates to foreign investors.

The main speakers gave a thumbs down.

"It's like giving treatment for an incorrect diagnosis," remarked Todung Mulya Lubis, a known human rights campaigner who now practices as a corporate lawyer.

Economist Rizal Ramli said the deregulation package virtually "stripped Indonesia naked" and warned that this strategy may not succeed in drawing foreign investors, because "when a naked woman walks on the street, nobody takes notice."

The deregulation package, popularly known as the PP20/1994, allows foreigners to own as much as 95 percent equity in various economic sectors previously reserved for local investors, such as transportation, power and the mass media.

Critics of the package have noted inconsistencies between PP20/1994 and other higher laws, such as the 1967 law on foreign investment and the 1982 press law.

The speakers at yesterday's limited discussion agreed that the deregulation package also runs counter to the spirit of the 1945 Constitution, which mandates that the government should retain control in economic fields which affect the lives of many people and manage these areas for the benefit of the people.

Mulya said the ruling will only promote more monopolies and oligopolies, in contravention of the Article 33 of the Constitution. "They must have misinterpreted the Article 33. They should have considered the original intentions of our founding fathers who wrote the Constitution."

Adnan Buyung Nasution, YLBHI executive director, stated that the spirit of Article 33 emphasizes the welfare of Indonesians, wherever they are.

Acknowledging that Indonesia is obliged to open up its economy under the General Agreement on Tariffs and Trade, Mulya said the package is "overly generous" to foreign investors.

He also doubts PP20/1994 will be effective in attracting foreign investors.

More effective

The government should concentrate on establishing good governance, because this is more effective than the total liberalization of the economy, he said.

The contradiction between PP20/1994 and several other legislative measures will only deter foreign investors who want legal security rather than political protection, he said. "It is bad precedence for the Indonesian legal system. Those who want to invest here will not feel secure."

Indonesian business laws are not well recognized abroad, he said, noting that over 90 percent of international business agreements involving Indonesian companies use foreign legal systems of either the U.S., Japan, the U.K. or Singapore.

Rizal, the chairman of the German-Indonesian Business Association, said the government moved too hastily in deregulating the economy, probably out of pressure due to rising competition for capital from neighboring countries and declining oil export income.

Rather than "stripping Indonesia naked," the government should have developed more fundamental strategies to attract foreign investment, such as improving the political system, strengthening the legal system and improving Indonesian manpower.

Both Mulya and Rizal said the House of Representatives (DPR) should move to overturn the PP20/1994, or failing that, someone could apply for a judicial review from the Supreme Court.

Mulya said he is prepared to help anyone who will take the initiative.

Oka Mahendra, the House's member from Commission II, who was also present at the discussion, said the House has asked the government to review the regulation, but to no avail.

"We have tried, but I think PP20 will not be withdrawn because our government is a bit obstinate. So, if possible, you lawyers can apply for a judicial review," Oka said. (11)