Omnibus Law could slow rather than drive Chinese investment in Indonesian energy
1 June 2022
As Indonesia’s government races against time to revise the controversial Job Creation Law – popularly known as the Omnibus Law – questions remain about the impact these revisions, and the nature of the law itself, may have on the realisation of energy and mining investments from China, one of the country’s largest foreign investors and trading partners.
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Yet, experts say the country should not see the Job Creation Law as legislation that could sustain and secure future mining and energy investments from China. [...]
Rebecca Ray, senior academic researcher at Boston University’s Global Development Policy Center, says her research on Chinese overseas investment shows that “rolling back environmental and social protections does not bring more Chinese investment” – conditions and an outcome the Job Creation Law has looked to stimulate. One of the critical elements of the law would be the implementation of deregulation policies, which could benefit oligarchs in the country.
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“The investors are there for other reasons,” Ray says. “And if they’re just not as well regulated, they’re more likely to run into social conflict, suspensions, even cancellations, because of environmental and social risks that were not properly taken into account in the planning stages.”
“Our work shows that a more constructive policy response is to work deeply with Chinese counterparts, find out what their motivations are, and find a way to jointly regulate these investments, which are often in very environmentally and socially sensitive sectors.”
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