Indonesia leader reassures firms after court rules against investment law

Indonesia’s President Joko Widodo on Monday said his government would ensure legal certainty for investors, offering continuity guarantees amid jitters and confusion over last week’s court ruling against a controversial job creation law.

The Constitutional Court, ruling on Thursday a case brought by labour unions, said there were procedural flaws in the formation of the legislation passed last year, which the government had touted as potential a game-changer in luring foreign investment to Southeast Asia’s biggest economy.

The court told the government to make necessary amendments within two years. The “omnibus” law saw the revision of more than 70 existing laws, in an effort to reduce red tape and streamline new business permitting.

The president stressed that the court had ruled the law would remain in effect pending the changes, which his cabinet would address as quickly as possible.

“I assure businesses and investors, both domestic and international, that the investments that have been made and investments that are being and will be processed, will remain safe and secure,” he said in a video statement.

“I will make sure that the government guarantees the security and certainty of investment in Indonesia.”

The assurance by Jokowi, as the president is known, comes as economists warn the ruling could dim Indonesia’s investment outlook and as business groups seek clarity and guarantees.

Chief economic minister Airlangga Hartarto on Monday said operations of the Indonesia Investment Authority (INA), its sovereign wealth fund, would remain unchanged, despite the ruling.

The fund was established based on the omnibus law and foreign investors have pledged billions of investment, including US$10 billion from the United Arab Emirates.

He told a conference that the government would ask parliament to make the revision of the law priority legislation.