What is Omnibus?

Before we talk about anything else, let’s talk about the origin of Omnibus. In the legal context,
according to the Merriam-Webster, omnibus comes from a Latin word omnibus that means “for
all.” Omnibus, however, is the dative plural of omnis, which means “all” in Latin. Sounds a bit
like an omnivore, a living creature that eats both flesh and plants, right?

Then, this word came into French. Back then, it meant “long, horse-drawn vehicles that
transported people along the main thoroughfares of Paris,” before becoming English.

Just for your information, the “omnibus bill” was the equivalence for “a bus loaded with
people.” This is because the bill contains numerous provisions. In the end of the day, Omnibus
Law is understood as “the rule of the rules,” in which more than one aspects are conjoined to
become a legislation.

The Start of Omnibus Law

Many of you guys then asked, how did the Omnibus Law start? Because of that reason, I’m
going to cover the start of the Omnibus Law until becoming a legislation we know today.

During his second-term presidential inauguration on October 20, 2019, Jokowi proposed two
legislations: UU Cipta Kerja (Job Creation Bill) & UU Pemberdayaan UMKM (SME Empowerment
Bill). In his speech, he told the public that these bills will not only revise several bills, but also
dozens of bills. He hoped to simplify the rules in quantity and in terms of the ruling so it will be
on target.

There are 11 sectors that are covered by the Omnibus Law, such as:

1. The simplification of land permits (penyederhanaan perizinan tanah)

2. Investment criteria (persyaratan investasi)
3. Employment (ketenagakerjaan)
4. The ease and the protection of SMEs (kemudahan dan perlindungan UMKM)
 5. The ease to start a business (kemudahan berusaha)
6. The support to do research and innovation (dukungan riset dan investasi)
7. Governmental administration (administrasi pemerintahan)
8. Sanction-imposing (pengenaan sanksi)
9. Land-controlling (pengendalian lahan)
10. The ease of governmental projects (kemudahan proyek pemerintah)
11. Special Economic Zone (Kawasan Ekonomi Khusus/KEK)

Additionally, these 6 sectors regarding taxation are covered:

1. Investment funding (pendanaan investasi)

2. Territorial system (sistem teritori)
3. Individual taxpayer (subjek pajak orang pribadi)
4. Taxpayer compliance (kepatuhan wajib pajak)
5. Business climate fairness (keadilan iklim berusaha)
6. Facilities (fasilitas)

The Debacle Between the Government and the People

Those discussions above cause a debacle within the people. Especially, the Job Creation
discussion of the Omnibus Law looked done in haste in the House of Representatives without
involving the people. How could it be? Isn’t the House represent us the people? Here’s the
explanation.

If we refer to the House of Representatives’ official website, the House has the power to create
legislation. A legislation can firstly come from the President, the Regional Representative
Council (DPD) regarding the regional autonomy, or the House itself, which will be sorted in a
National Legislation Program (Prolegnas). Then, the draft that has been agreed within the
House and the President will be promulgated as a legislation.

Unfortunately, this is not the case with the Omnibus Law. In comparison to the previous
legislation, the people felt the discussion inside the government has been conducted in haste
despite the pandemic. For example, the mayor of Bogor, Bima Arya, criticized the discussion
process was in a hurry on why it has to be targeted to be done in 100 days. He stressed several
crucial points that need to be discussed openly with the people and the regional government to
ensure transparency, more participation, and inclusion.

Those points raised by the people are mostly within the export-import and the employment
sector, which they deem harmful. Summarized by Kompas, supported by Tirto in the
aforementioned infographic, those are:

1. The abolition of the citywide minimum wage (Upah Minimum Kota/Kabupaten or UMK),
replaced by the province-wide minimum wage (Upah Minimum Provinsi or UMR).
2. Increased overtime hours, from a maximum of 3 hours to 4 hours daily, and from a
maximum of 14 hours to 18 hours weekly.
3. Lifetime contract and vulnerability to work termination.
4. The reduction of time-off, from only one day per six working days, and the abolishment
of the two months per six months’ sabbatical.
5. The ease of foreign workers’ recruitment

Aftermath

Since the Omnibus Law first discussed, it received backlash against the House in form of various
demonstrations. One notable demonstration was from March 2020, when the workers’ union
demonstrated against the Omnibus Law draft. They demanded for the employment-related
rulings to stick to the status quo on the Employment Act number 13/2003 over the above
reasons. The chief of the Indonesian Trade Union Confederation, Said Iqbal, said that Jokowi’s
intention to attract foreign investments to create a working field doesn’t mean the government
has to sacrifice the workers’ rights.

As a result, according to the Secretary of the Coordinating Ministry for Economic Affairs,
Susiwijono, every economical stakeholder would be involved in the discussion, as ordered by
the President. He continued that a roadshow would be held to accommodate people’s
aspirations in the law’s creation. On the contrary, according to the member of Gerakan untuk
Indonesia Adil dan Demokratis (Movement for Fair and Democratic Indonesia/GIAD), Jeirry
Sumampow, the government should have postponed the Omnibus Law discussion in the midst
of the Covid-19 pandemic.

During the process, Covid-19 strikes the world (causing lockdown in various countries ranging
from the Netherlands to Canada) and Indonesia is also affected. With people questioning how
the Indonesian government handled the coronavirus, they came up with the hashtag Atasi Virus
Cabut Omnibus (Overcome the Virus, Repeal the Omnibus) to demand the government to solve
the never-ending first wave of coronavirus in Indonesia.

The String of Demonstrations

Within seven months, the string of demonstrations continue, with the most notable coming
within October 6-8, 2020 – the days when the House scheduled to meet over Omnibus Law.
Suddenly, the House fast-forwarded the discussions to October 5, 2020, and officially
promulgated the law, resulting in demonstrations in 18 provinces, which mostly ended up
violently. Only two political parties opposed this law, which is the Democratic Party (Partai
Demokrat) and the Prosperous Justice Party (PKS).

Several days after most demonstrations, Dradjad H. Wibowo, an INDEF economist, admitted
that the House of Representatives passed an incomplete draft. One main reason is because the
team in charge of formulating the law hasn’t yet to finish the draft. According to the
constitutional law expert, Faiz Rahman of Gadjah Mada University (UGM), it was strange that
the lawmakers had claimed not to receive a draft during the plenary session–because each
member should’ve been given and read the final draft before passed into law. This caused
another uproar from the people continuing the protest until the Omnibus Law is repealed.

2 November 2020) Indonesia’s closely watched omnibus jobs creation bill recently became law.
The stated aim of Law No. 11 Year 2020 on Jobs Creation (the “Omnibus Law”) is to bolster
investment and create jobs by streamlining regulations and simplifying the licensing process to
improve the ease of doing business in Indonesia.

The Omnibus Law revises various provisions in laws across multiple sectors of the economy,
including Law No. 5 of 1999 regarding Prohibition of Monopolistic Practice and Unfair Business
Competition (“Competition Law”). The Omnibus Law amends four articles and deletes one
article from the Competition Law. At a glance, the changes may appear to be minor, but these
small changes may have big consequences for business players, domestic and foreign alike.

We discuss the noteworthy changes and the potential consequences of these changes.

Changes to Appeal Procedure

The Omnibus Law amends two articles that deal with the process of appealing a decision of the
Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or “KPPU”).
These changes are meant to designate the Commercial Court as the venue for any appeal of a
KPPU decision. Previously, the appeal had to be submitted to the relevant district court. Now
the Commercial Court, which specializes in handling commercial disputes such as bankruptcy,
liquidation and intellectual property disputes, will have jurisdiction over competition matters.

It remains to be seen how the new appeals procedure will unfold in practice, particularly
whether the civil procedural law will apply to the appeals process in the Commercial Court for
competition cases. The Omnibus Law only mandates the issuance of an implementing
Government Regulation to address the imposition of administrative sanctions; there is no
mandated Government Regulation to further clarify the new appeals process. Therefore, we
will have to wait and see whether, despite not being directly mandated, the Government will
provide some clarity to the appeals process in the Government Regulation to be issued or
whether the Supreme Court will issue a circular letter to fill the void.

Removal of Administrative Fine Cap

Perhaps the most significant change to the Competition Law is the deletion of the cap on
administrative fines imposed by the KPPU. Formerly, under Article 47 of the Competition Law,
the KPPU could impose administrative fines of between IDR1 billion and IDR25 billion. Under
the Omnibus Law, Article 47 of the Competition Law is amended to remove the IDR25 billion
cap. This means the KPPU may have the power to impose even larger administrative fines for
violations of competition laws and regulations.

This could be most significant in the case of merger filings. The current implementing
Government Regulation on merger filing, Government Regulation No. 57 of 2010, stipulates
that the KPPU may impose an administrative sanction in the amount of IDR1 billion per day for
a delay in submitting a merger notification to the KPPU up to a maximum amount of IDR25
billion, consistent with the power granted to the KPPU under the original text of Article 47 of
the Competition Law.

Removing the cap on the administrative fine would potentially give the KPPU the power to
impose a daily administrative fine without limit until the merger filing is made to the KPPU. If
this proves to be true, business players would need to carefully consider the potential higher
exposure on merger filings and any other competition regulations applicable to them.
Limited Imposition of Criminal Sanction

While we have seen the potential expansion of administrative sanctions through the removal of
cap on administrative fines, the Omnibus Law also amends Article 48 and deletes Article 49 of
the Competition Law to limit the scope of potential criminal sanctions.

Formerly, the Competition Law stipulated criminal sanctions for various violations of the
Competition Law, including oligopolistic practices, price-fixing, cartel practices, vertical
integration and abuse of dominant market position. Under the Omnibus Law, Article 48 is
amended so that only a violation of Article 41 of the Competition Law – refusing to provide
evidence or hindering the investigation process –,might potentially result in a criminal sanction
in the form of a maximum IDR5 billion fine or imprisonment for one year.

The Omnibus Law also deleted Article 49 of the Competition Law on additional criminal
sanctions that may be imposed. Previously, for violations of the Competition Law, additional
criminal sanctions could be imposed in the form of revocation of licenses, prohibition on the
violating party acting as the director or commissioner of a company, or suspension of business
activity.

Key Takeaway

The removal of the cap on administrative fines is concerning because business players would be
exposed to unlimited administrative fine. However, we see the Government trying to balance
this new risk by limiting the potential exposure to criminal sanctions for violations of the
Competition Law. It remains to be seen if this effort will strike the kind of balance that would
encourage business players to enter and stay in the Indonesian market. As with other
provisions under Omnibus Law, we will have to wait until the mandated implementing
Government Regulation is issued for further clarity on the above changes.
The Indonesian House of Representative has ratified the Jobs Creation Bill (RUU Cipta Kerja and
widely known as the "Omnibus Law") on 5 October 2020, after approximately 8 months of
deliberation.

There are 76 laws being amended under the Omnibus Law which are aimed to boost
investments and create more jobs in Indonesia. Among others, the Omnibus Law introduces (i)
provisions to simplify business licensing procedures and (ii) changes to the existing manpower
law.

The Omnibus Law is still under its promulgation process and is still to be ratified by the
President. Nevertheless, with or without the President's signature, the Jobs Creation Bill will
automatically become law on 5 November 2020.

The Omnibus Law sets out a framework for revising the investment regulations surrounding
foreign investment and ownership, but it does not in itself overrule the current policies. Details
of expected substantive changes are yet to be announced and will require implementation
through further rules and legislation.

This article provides a discussion on key changes brought by the Omnibus Law on: (a)
enhancement of investment ecosystem and business activities; and (b) changes to the existing
manpower law.