The passing of the Omnibus Law in Parliament prompted mass protests and a massive upsurge in online agitation. Picture: AFP / Juni Kriswanto

JAKARTA – In a major setback for President Joko Widodo, Indonesia’s Constitutional Court has declared his landmark Job Creation Omnibus Law partially unconstitutional and in doing so appears to be establishing itself as a backstop in a political system devoid of an effective opposition.

Taking a leaf out of the US Supreme Court’s historic 1803 Marbury vs Madison case, five of the court’s nine justices decided that Widodo’s ruling coalition had ridden roughshod over the procedures laid down for drawing up a bulky law that had no precedent in Indonesian statues.

An unhappy Widodo said he would take immediate steps to rectify the mistakes, but in a statement issued three days later he took pains to stress the court’s ruling that the law and the implementing regulations issued so far remain intact and valid in the meantime. 

“I submit to you that the government’s commitment and my commitment towards a structural reform agenda, de-regulation, de-bureaucratization will continue,” he said. “Legal certainty and the government support to facilitate investment will continue to be led by me – and I will make sure of that.”

That was putting a brave face on a situation, which despite the president’s assurances has created significant uncertainty for investors, who otherwise have applauded the law for removing many of the bureaucratic obstacles that have constrained Indonesia’s competitiveness.

“The court’s decision will have confirmed the worst fears of investors that the problem of regulatory uncertainty in Indonesia is not going away anytime soon and indeed may be getting worse,” says Jakarta-based lawyer Bill Sullivan, who specializes in the natural resource sector. 

The 1,035-page omnibus package, revising 79 troublesome laws in one ambitious sweep, was first submitted to Parliament in April 2020 and passed six months later after being deliberated in haste by a working committee of the House of Representatives (DPR) Legislative Council.

In its 5-4 decision, the Constitutional Court said the government and the DPR, dominated by Widodo’s ruling seven-party coalition, can not issue any new regulations based on the law and that the legislation must be “repaired” within two years or risk being declared null and void in its entirety.  

Indonesian President Joko Widodo (C) speaks during a visit to a Mass Rapid Transit (MRT) project in Jakarta on February 23, 2017. Photo: AFP / Adek Berry

The court criticized the lack of public participation in the process and also said the draft signed by an impatient president in November last year and published in the State Gazette had many “differences and irregularities” compared with the legislation that had sailed through Parliament.

Under scrutiny since the passage of the revised Constitutional Court Law last year that raised questions about its impartiality, the latest decision suggests a majority of the panel is concerned over the lack of checks and balances in the political system, seen by critics as a sign of a fraying democracy.

“This has implications for the future,” says former attorney-general Marzuki Darusman, a veteran of the Golkar Party which ruled the roost in Indonesia for more than three decades. “It opens up a new leaf in jurisprudence and brings the court to a higher level of relevance in the system.”

The ruling coalition controls 471 of Parliament’s 575 seats, with only the Justice and Prosperity Party (PKS) as the single opposition party and former president Susilo Bambang Yudhoyono’s Democrat Party taking a centrist position.

Two of the five assenting justices were appointed by Parliament, two by Widodo himself and one by the Supreme Court, making it difficult for conspiracy theorists to draw any conclusions over what else might lie behind their show of independence.

In a recent speech, one of the judges, Suhartoyo, stressed the court’s role as protector of citizens’ constitutional rights and said it must be both impartial and independent in a process that treats the law as having “sense and soul.”

Legal experts say that in quoting Marbury vs Madison, a landmark US Supreme Court case creating the principle of judicial review over the legislative process, they were endeavoring to show that their decision was based on a sound legal footing.

“There was a lot of philosophizing on international legal principles in this,” says one lawyer after a careful examination of the judgment. “What they wanted to show is they have the ability to say what is constitutional and what isn’t. It’s gone to incredible lengths to make itself credible.”

Chief Justice Anwar Usman, a Supreme Court appointee, was among the four justices who offered a dissenting opinion, basically arguing that the majority was being too strict in imposing additional conditions on the DPR not required by the Constitution.

Indonesian President Joko Widodo addresses Parliament in Jakarta, August 16, 2019. Anton Raharjo / Anadolu Agency

Indonesia’s Parliament has often been criticized for its weak law-making and the holes left in bills that invite ambiguity and corruption in equal and related measure. In this case, Widodo saw the omnibus law as the best instrument to short-circuit the time-consuming reform process.

Perhaps with an eye on his legacy, the so-called “infrastructure president” has clearly been counting on it to help drag the economy out of its post-pandemic malaise and accelerate growth to 5-6% levels during the final three years of his second term.

Legal experts say the bill was handled sloppily from the beginning with multiple versions being circulated through the business community and on social media. When a supposedly final draft did appear, it was also subject to changes and corrections.

That may partly explain why the court pointed to differences, apparently in substance and language, between the legislation that passed Parliament and the statute published in the State Gazette. It is not the first time this has happened.

The most brazen example was in 2014 when efforts were made by senior civil servants to sabotage some of the key elements of the Bureaucracy Reform Bill by slipping 12 discrepancies into the draft approved by Parliament’s internal affairs commission.

The court judgment may have created confusion itself by ordering the government to suspend all “strategic and broad-impact policy actions” related to the law, in addition to the ban it imposed on any new implementing regulations. 

The Indonesian Legal Foundation (YLBH) said the court should have revoked the law in its entirety to avoid the legal uncertainties. As it is, Widodo gets the opportunity to salvage it, which he must prioritize if his reform agenda is to stay on track.

While officials have sought to downplay the impact of the court decision, still in process are legal challenges lodged by mostly labor and environmental groups, which may compel the government to address substantive issues in the statute as well.

The 448-page opinion did not offer suggestions on what the government should do to change parts of the legislation it has already pinpointed as troublesome, but for the moment the focus is on what procedures weren’t followed.

That, say experts, necessarily means the government will have to go back to Parliament to try to rectify the mistakes and omissions made during the course of deliberations.

University students protest the omnibus laws outside the Indonesian Parliament in Jakarta, September 24, 2019. Photo: Twitter / Tempo

It is a task that may prove more problematic than it appears as the lengthening shadow of the 2024 presidential and general elections changes the country’s political dynamics.

“It should have been done more carefully, but we were racing against time to meet the president’s deadline,” acknowledged one senior administration official. “We also had no experience with such a different type of legislation.”

The omnibus concept was copied from a relatively common practice in the United States and Canada, but the court said the drafters failed to conform with 2011 legislation laying down the rules to be followed in framing new laws and regulations.

Some analysts are suggesting that the government could issue a regulation in lieu of law (Perppu) to find a way of getting around the absence of a legal foundation for the omnibus law concept in the 2011 statute.

The current Constitutional Court was first instituted in 2004, but after an encouraging start its prestige has taken several damaging blows, first in 2014 with chief justice Akil Mochtar being imprisoned for life for taking bribes from politicians, then in 2018 when justice Patrialis Akbar was given eight years’ jail for the same offense.

Although it has gained a better public standing in recent years, legal experts say some of its recent decisions, such as one on the enforcement of fiducial, or standard of reference, instruments have caused confusion and other judgments have been considered too narrow-minded.