JAKARTA: The Indonesian Employers Association has warned that a recent court order to overhaul the 2003 Manpower Law will create regulatory uncertainty, while prolonging the process could deter investments, especially in labour-intensive industries.

Unless the government and the House of Representatives can settle the matter swiftly, Apindo said, the ensuing regulatory limbo could hurt investor confidence and undercut president Prabowo Subianto’s goals of attracting substantial foreign investment and driving 8% economic growth.

“We need this settled immediately,” Apindo labour affairs chair Bob Azam told reporters on Nov 7.

“There should be no more surprises from the government. Regulations should be predictable.”

Bob noted that the forthcoming revision to the labour law would be the fourth in the past decade.

He added that investors across industry sectors had approached the association about the implications of the court ruling, especially for wage systems and other manpower issues.

“This is becoming emblematic of Indonesia’s inconsistency in drafting regulations,” he said. “For businesses, it raises a red flag.”

The Constitutional Court ordered lawmakers and the government on Oct 31 to draft a new manpower law within two years after it ruled in favour of a petition from labour groups on the controversial 2020 Job Creation Law, which was revised last year over similar issues.

The court observed in its ruling that although the jobs law was supposed to replace the Manpower Law, it failed to address some of the substance in the latter.

This had led to the coexistence of two labour laws, neither of which were “in an intact form”.

This has made it difficult for the public, particularly workers, to know which regulation was applicable.

The court ruling also granted the petition’s demand to revise 21 provisions on seven key issues, including wages, outsourcing, contract work, severance and foreign workers.

M Yahya Zaini, deputy chair of House of Representatives Commission IX overseeing manpower and transmigration, told a plenary session on Tuesday that lawmakers would include overhauling the Manpower Law in next year’s priority legislation, adding that complying with the court ruling was “pressing”.

House Deputy Speaker Sufmi Dasco Ahmad of the Gerindra Party said on Nov 6 that the court ruling had invalidated the existing rule on wages as stipulated in Government Regulation No. 51/2023, Tempo.co reported.

He also stressed that discussions on the new manpower law would need time and could not be rushed.

The ruling comes just weeks before the Nov 21 minimum wage deadline for provinces and the Nov 30 deadline for cities, which are calculated in line with the relevant provisions in the implementing regulation.

Bob recommended that the 2025 minimum wages refer to Government Regulation No. 51/2023 instead, which sets an annual wage increase of 3.5%, far below workers’ demand of between 8% and 10%.

He added that Apindo hoped the government would consider the current financial vulnerability of labour-intensive industries.

Korean Chamber of Commerce and Industry in Indonesia chairman Lee Kang Hyun expressed similar concerns.

He told The Jakarta Post on Tuesday that labour-intensive companies were already feeling the pressure from the court-ordered changes to the wage system, and that he supported Apindo’s push to maintain the existing wage scheme.

Labour groups, which urged a halt to ongoing discussions on next year’s minimum wages on multiple occasions, have lauded the court’s ruling.

Kahar S Cahyono, spokesperson of the Confederation of Indonesian Trade Unions, told reporters on Nov 7 that announcing the new minimum wages by the traditional deadlines was not a must, as the current circumstances could fit the principle of force majeure.

 - ANN