A Strategic Move or a Missed Chance? An Analysis of the Indonesian Constitutional Court Decision on the Omnibus Law on Job Creation

Abdurrachman Satrio

Institute for Migrant Rights

On 26 November 2021, the Indonesian Constitutional Court issued one of its most awaited decisions about the judicial review of Law No. 11 of 2020 (better known as the Omnibus Law on Job Creation). In its decision, the Constitutional Court emphasized that the process of establishing the Omnibus Law on Job Creation was unconstitutional because it contradicted the procedure for law establishment as stipulated in Law No. 12 of 2011 concerning the Procedure to Make Legislation.

However, despite declaring the Omnibus Law unconstitutional, the Constitutional Court refused to strike down the law. Instead, the Court decided to maintain the law’s existence provided that within two years after its decision was issued, the lawmakers (the President and the House of Representatives) revise the Omnibus Law on Job Creation in accordance with the correct procedures to form legislation as stipulated by Law No. 12 of 2011. If within such a period the lawmakers fail to respond to the Court’s order, then this law will be permanently annulled. Delaying a decision’s enforcement is not a new practice performed by the Indonesian Constitutional Court; the Court has often made decisions using this method, and they have labelled such decisions “conditionally constitutional”.

However, this is the first time that a “conditionally constitutional” decision has been used in a judicial review case concerning formalistic grounds. In fact, this decision is also the first time that the Constitutional Court has declared a law unconstitutional for a formal reason, whereas in several of their previous decisions (see the Decision No. 59/PUU-XVIII/2020 and the Decision No. 79/PUU-XVII/2019), the Court has refused to declare a law unconstitutional on formal grounds.

In this post, I will outline the state of constitutional democracy in Indonesia, before assessing the main reason why the Court declared the Omnibus Law on Job Creation “conditionally constitutional” and offering a brief explanation for why the Court might have made this decision in light of the political context.

Omnibus Law and the Weakening of Democratic Procedure

Since the President first initiated the idea of ​​creating the Omnibus Law on Job Creation, there have been varying controversies regarding the substance of this law; ranging from criticism that the law has a negative impact on the environment due to its oversimplification of the business licensing process, to a lot of praise that this law will boost Indonesia’s economic growth and attract more investors.

Regardless, there is a general consensus from the public that the process of forming this law was rushed and lacking in transparency, with parties who have different views from the government—such as NGOs and scholars—excluded from the drafting process. The bill’s deliberation process was also conducted by the government and the House of Representatives in less than 6 months, a very short period of time considering the massive range of scope and substance of this law. The law touches on various issues such as environmental protection, workers’ rights, land rights, transport, energy, agriculture, and taxation, and should it be legalized, it has the potential to cause changes to 77 existing pieces of legislation in Indonesia.

With such a background, it is not surprising that after the enactment of this law, massive waves of demonstrations emerged in various cities in Indonesia, where people felt that several provisions in the Omnibus Law—including on workers’ rights, environmental protection, and expenditure—do not reflect the actual needs of the people.

The process of enacting this controversial law cannot be separated from the current political context in Indonesia. Since President Jokowi took office in 2014, the quality of Indonesia’s democracy has been steadily declining. In fact, many observers agree that Indonesia is currently experiencing a democratic decline, as has happened in other countries such as Hungary, India, and the Philippines.

This decline has occurred partly because of Jokowi's success in consolidating the support of political parties in the House of Representatives, which reduces the efficacy and the independence of the House of Representatives and effectively renders it as a “rubber stamp” to the policies of Jokowi’s government. This has led to the emergence of many procedural violations that occur in the process of enacting law. For example, almost simultaneously with the creation of the Omnibus Law on Job Creation, the government enacted several other laws which are also considered to have been formed in an undemocratic and non-transparent manner, such as the Amendment to the Law on the Constitutional Court, the Amendment to the Law on the Anti-Corruption Commission,  and the Amendment to the Mining Law. In fact, some of these laws were even enacted with the aim of weakening the function of other state institutions that are mandated to supervise the government (see the weakening of the Anti-Corruption Commission). 

The Implication of the Constitutional Court’s Decision 

In this decision, the Indonesian Constitutional Court declared that in the process of enacting the Omnibus Law on Job Creation, there were violations of many basic principles regarding the formation of laws as regulated in Law No. 12 of 2011 concerning the Procedure to Make Legislation, especially in relation to the principles of clarity (asas kejelasan rumusan). The reason for these violations was that this law is formed through the omnibus method —ie, it is a law that affects the status of dozens of other pieces of legislation—without providing a clear answer concerning the future status of the amended legislation once the omnibus law is enacted. 

Besides that, the Court also considered that the process of enacting this law was carried out in an undemocratic manner, due to the lack of space provided for the public to participate in the deliberation process.

However, as mentioned earlier, despite stating that this law is unconstitutional, the Court refused to annul this law. The Court noted that it “understands the importance of drafting policy for job creation and related arrangements” as claimed by the government, and thus instead gave a two-year time limit for the lawmakers to revise this law in accordance with the correct procedures for the formation of legislation and in ways that involve more participation from the public.

Looking at this decision, of course, it may sound strange for the Constitutional Court to order the lawmakers to fix the law-making process of a law that has already been enacted. The question remains: Why should lawmakers repeat such a process if they do not need to change the substance of the affected law? To understand why the Indonesian Constitutional Court issued this peculiar decision, it is necessary to understand the current political climate in Indonesia. As mentioned above, it is undeniable that in the past few years, Jokowi’s government has succeeded in consolidating their power.

So, from a political standpoint, this decision may be the best move that the Constitutional Court can make in the current context: it suggests that the Court is independent, as the public desire, and shows that the Court can still remind the political institutions if their actions are unconstitutional, without directly confronting them. This ambiguous attitude is actually a reasonable choice, considering that several years ago there were attempts by political institutions to weaken the Court’s authority when their decisions were seen as being too confrontational. The Court decided to fight another day as suggested by Dixon and Issacharoff, which may sometimes be a wiser move by the Court to save the state’s constitutional democracy in the long-run.

Abdurrachman Satrio is a comparative constitutional law researcher at the Institute for Migrant Rights, Cianjur, Indonesia

Suggested Citation: Abdurrachman Satrio, ‘A Strategic Move or a Missed Chance? An Analysis of the Indonesian Constitutional Court Decision on the Omnibus Law on Job Creation’ IACL-AIDC Blog (17 February 2022)