Indonesian protests over new laws threaten business sentiment

Indonesian riot police officers use a water cannon during clashes with students following a protest outside the Parliament building in Jakarta on Sept 24, 2019. PHOTO: EPA-EFE

JAKARTA (BLOOMBERG) - Violent street protests in Indonesia against a number of controversial laws risks damaging growth and stability in South-east Asia's biggest economy, according to Finance Minister Sri Mulyani Indrawati.

Thousands of protesters rallied on Tuesday (Sept 24) in cities across Indonesia against sweeping legislation that would outlaw sex outside of marriage, infringe on gay rights and potentially derail efforts to attract more foreign investors.

The students are also angry over a law passed last week that weakened the authority of the country's Corruption Eradication Commission, a key agency in the fight against graft.

The proposed changes are viewed by analysts as not only a winding back of democracy, but also damaging the investment climate.

While interest rate cuts and quantitative easing in Europe and the US had brought positive sentiment and generated significant inflows to Indonesia, that could be at risk, Dr Sri Indrawati said on Tuesday.

"Hence, we might have to guard the current situation to bring back the momentum and stability, so that we can focus more on the external risks," she said when asked about the protests.

"I hope that whatever triggered this can be discussed through existing political processes so that it does not cause a wider impact or damage sentiment," she said.

While President Joko Widodo last week moved to delay the changes to the criminal code, they may still be reintroduced when the new Parliament is sworn in next month.

Dr Sri Mulyani was earlier at the Parliament for a plenary session that approved the government's 2020 Budget when protesters converged on the building, prompting security to lock the doors.

The house had initially been expected to pass the criminal code changes, before Mr Joko moved to delay the legislation.

The wide-ranging legislation would also clamp down on abortions, dissent and freedom of speech.

"Passing these controversial revisions to the country's criminal code would send a terrible signal to foreign investors," said Mr Hugo Brennan, principal political analyst with Verisk Maplecroft.

"Companies with a physical presence in Indonesia will be scrambling to understand the significant human security risks that the Bill would pose to their workforce, if passed into law."

SECOND TERM

The latest unrest comes as Jokowi, as the president is known, prepares to be sworn in for a second term next month. He has also faced anger over changes to an anti-corruption law that human rights groups said would deal a blow to efforts to tackle graft.

"President Jokowi's reformist credentials are in tatters following his failure to prevent the House weakening the Corruption Eradication Commission," Mr Brennan said.

"A failure to step in a second time would represent a mortal blow to his much-dented reputation as a broadly progressive politician," he said.

Violence also flared in Indonesia's restive Papua region on Monday with as many as 32 people killed and dozens more injured.

The resource-rich Papua region has been dealing with a low-level insurgency for decades and was rocked by separatist protests last month, forcing the authorities to deploy additional troops to quell the violence that targeted government buildings and the army.

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