Omnibus Law Bill: Supportive or Destructive for Indonesia’s Maritime Sector?

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Siswanto Rusdi Director, The National Maritime Institute (NAMARIN), an Independent Maritime Think Tank in Jakarta

 IO – The Indonesian government recently launched an omnibus law bill, one objective of which is to create more jobs in the maritime sector. President Joko Widodo is expected to amend a considerable number of sections in the existing Shipping Law No. 17/2008. Apparently, Indonesia was inspired by Philippines, the first country among the ASEAN countries to implement the revised codicils. 

However, many domestic maritime stakeholders consider that the changes will in fact be regressive for the sector rather than empowering it. They point to the Global Maritime Fulcrum (GMF) that was instituted during Jokowi’s first term in office, and proved to be quite detrimental. 

 The GMF was hailed as a breakthrough, nationally and globally, given that Indonesia is blessed with an abundant maritime domain. This should logically provide it a competitive advantage in maritime sectors like shipping and port business; it was thus accorded a high priority in government programs. 

Under the auspices of the GMF, in particular the maritime connectivity pillar, new ports were to be set up and scores of new vessels built to more completely connect the archipelago, through a navigational highway or “Tol Laut”. All maritime-related groups were happy, though they also admitted that the intended policy would not reduce the price disparity between Java and the outer islands. This “honeymoon” would come to a bitter end when the government issued a new bill that aimed to create more jobs and vacancies for the workforce. 

While the government repeatedly emphasized how the new law would reflect its strong commitment to facilitate the business environment by cutting through red tape, and shipping bosses admitted this, saying that the bill would boost efficiency at the port, seafarers were strongly against it and staged demonstrations to reject the draft. 

The new Law, formally named “Rancangan Undang-undang Cipta Kerja” (Job Creation Bill), is an omnibus type of legislation. It contains chapters which are designed to amend or even delete hundreds of chapters of existing laws. For instance, Chapter 59 of the Omnibus Law amends 60 chapters and chops 10 chapters down from existing Shipping Law No. 17/2008. These chapters are very technical. At this point the rectification was highly appreciated by the country’s shipping players, since the affected subjects could be regulated with a more flexible bylaw like ministerial decrees or Director General circulars. 

There are three key issues that need expediting, but there is no reference to these in the bill. First is the coast guard. This is a complicated subject, involving conflicting interests among multiple government agencies that have authority and control assets to patrol the country’s territorial waters, i.e. National Police, Indonesian Navy, Ministry of Fisheries and Marine Affairs, Ministry of Transport, Ministry of Finance, and Maritime Security Board or Bakamla. However, in the circulated draft this issue has not been resolved. The existing Shipping Law is the best entry point to settle it, given that it contains, for instance, the specific word “coast guard”, something that is not mentioned in the Ocean Law No. 32/2014, which is the legal basis for instituting the Bakamla. Moreover, the Shipping Law has no provision to mention the mission of the coast guard across the world i.e., the enforcer of maritime safety. Similarly, such a phrase is absent in the Ocean Law. 

In response to the above observations, two senior ministers in charge of maritime affairs and security affairs, Mr. Luhut B. Pandjaitan, Coordinating Minister for Maritime Affairs and Investments, and Mr. Mahfud MD, Coordinating Minister for Political, Legal and Security, clarified the matter by stating the Indonesian coast guard issue would be addressed in a separated regulation. Apparently, the government is simultaneously preparing another omnibus law dedicated solely to the subject in question, and a presidential decree or Inpres (Instruksi Presiden). Their bottom line is that the agency would be established by the empowerment of Bakamla. Other agencies, one speculation suggests, are to be dissolved into it. 

The second issue is about minimum wages for domestic seafarers. In Indonesia, the standard is generally determined by the governor of a province after consulting the relevant parties. Since seafaring is a specific, skilled profession, its minimum wage is decided by the central government, i.e. the Ministry of Transport. But, for years the ministry has not been able to establish a single salary reference for the job. Consequently, the national shipping operators pay seafarers according to their own standard. The bona fide companies usually refer to the existing regional wage standard and add certain benefits. Lack of directives pertaining to the standard in the omnibus law bill have triggered massive demonstrations by the seafarers’ unions across the archipelago. They demand the bill be revoked. 

Thirdly, the omnibus law bill strips the role of the regional administrations from maritime affairs. Though half-heartedly implemented, the existing Shipping Law still provides them room to maneuver through licensing or recommendations. Under the new bill, these powers are withdrawn and reside with the government in Jakarta. With the unsuccessful results of Tol Laut in suppressing the price disparity between Java and outside Java, the governors or mayors’ role in the sector should be expanded instead. 

Indonesia has to learn from other countries in the region on how to position the regional administrations in developing the country’s maritime sector. One of these is India, where the states have as much power as possible in maritime affairs. With such authority, the administration of Andaman and Nicobar, the country’s regions that are relatively close to Indonesia’s Aceh province, launched a shipping connectivity to Sabang City sometimes ago. Yet, there is no report on how it is progressing right now. 

The connectivity is worth maintaining because the two regions have huge volumes of commodities to be traded and their people share a deep cultural linkage that may be reestablished by the shipping service. For Sabang City administration all these possibilities can only be elaborated and executed under one condition: they have a greater authority.