Annul Omnibus Law, transfer bridging funds to the people

Gede Sandra Bung Karno University Economic Analyst seriousness and comprehensive efforts to accelerate the fulfilment of MEF. For example, they have reevaluated defense cooperation contracts that were deemed ineffi- cient, opened up window of cooper- ation with various countries so that we are not dependent on a single country, and lastly, they have also strived to beef up the national de- fense industry. So, the steps taken by the Defense Ministry have been no less comprehensive. We urgent- ly need to make key breakthroughs to have a strong national defense system in less the time it would normally take. Other than the things I have mentioned above, I concur that this grand plan certainly still has to be refined and finalized together with the Parliament.

IO – Public outrage over the Omnibus Law bill results from the absence of any economic “pie” to be created for the majority of Indonesians, and its impact on environmental sustainability. The Omnibus Law is expected to generate economic growth, but we have been kept in the dark about what the growth rate will be and how many jobs will it create. Indeed, many believe that the Omnibus Law will only enrich and work in the interests of the richest one percent. 

Tax incentives, ease of license renewal for the extractive sectors and oppression of the working class are all in the interests of the richest few, factory owners and extractors of natural resources. The documentary film “The Sexy Killers” by Dhandy Laksono has very well illustrated the intertwined oligarchic mutualism between natural resource extractors and corrupt state officials. 

When Indonesia is on the brink of a COVID-19-induced recession, the safety net is only extended to the rich people, who initially got rich from destroying the environment. They have seen their wealth go up with the abolition of taxes, while the majority of people are left to suffer amid widespread environmental degradation. Social aid was corrupted by the bureaucracy and complex red tape made which only serves to prolong the epidemic. SMEs are left fending for themselves with many of them suffering the most at the moment. 

As for the oligarchs, they are among the prioritized groups to be saved when the crisis comes because they are in power. In just a matter of days, the financial market was flooded with hundreds of trillion of bridging funds by Bank Indonesia and the Ministry of Finance (compared to social aid funds which took months to be rolled out). The cheap money is used to buy back their declining shares and to prop up the Rupiah exchange rate. 

This belies the truth that efforts to save the economy through shares buy back and purchase of bond are to a large extent useless, because the stock market and the value of the Rupiah will definitely tumble again soon so long as the vaccine has not been discovered. This means that the hundreds of trillions of rupiah that had been disbursed would be in vain because it will only enriched speculators of the stock and foreign exchange markets, while the real economy continues to suffer. 

Imagine the dramatic improvement it will have to people’s welfare if the hundreds of trillion of Rupiah of funds are disbursed directly to the public. Purchasing power can be sustained, driving consumption of goods and services. Eventually the economy can be revived and take a turn for the better. 

This imbalance and misguided policy of prioritizing the rich and ignoring the majority of the people will depress the economy further and fuel public anger. If the government and House of Representative don’t take drastic action, there is increased risk that this simmering anger will coalesce, expand, and eventually spill over. It is not unlikely that people will seek more fundamental political changes in the end. 

So, before it is too late, there is no other way for the government than to immediately revoke the ratification of the Omnibus Law bill and refocus its attention on the economic recovery of lower-income and middle-class communities. 

What we are proposing is that there must be social aid in the form of bridging funds that can sustain people’s purchasing power. The amount is around IDR 600,000- 800,000/month and is directly disbursed to communities in need – the unemployed, street children, beggars, day laborers, farm laborers, to street side vendors. To achieve this, we can request the assistance of state-owned banks such as BRI and BNI. Every individual in need of social aid must create an account with a bank. 

Transferring social aid funds through banks will minimize corruption by the bureaucracy, while at the same time providing a larger customer base for the banks involved. Another advantage is that the government can obtain specific data from the recipients of social aid, so that in the future social assistance policies can be more targeted and effective. In the midst of a crisis, we can still gain the upper hand of the situation to stimulate the economy and create a more just society.