Indonesian Parliament: New EU peat regulation has negative domino effect



Much to the delight of the foreign NGOs the new EU peat swamp regulations is triggering a trade war and sours bilateral relationships between Brussels and Jakarta.

The Jokowi administration’s lack of comprehension of foreign interventionist policies using restrictive NGO policies are hitting key domestic economic sectors hard. Loss of foreign currency trade, taxes to the state and employment impacting the economy negatively.

Experts have warned for some time the policies of Jokowi harm the economy. Industry leaders warned the constant restrictions on palm oil and paper industries are impacting the Gross Domestic Product (GDP) negatively.

Firman Subagyo, a member of Commission IV of the Indonesian House of Representatives said, “That forest and peat swamp management must also consider aspect of ecology, economy and social. That’s why the regulation must protect every aspect instead of killing the existing sectors.”

Related to recent Ministerial Regulation on Development of Industrial Forest Plantation, commonly referred to as P.17, Firman said that the regulation has a domino effect.

“There are multiplier effects. First, state income will decrease. Very likely factories will close their operations, foreign exchanges will decrease again, and unemployment… How do we suppose to replace those things?” said Firman on Wednesday (12/4).

Firman continues that entrepreneurs both, in plantation and forestry sector, must get legal certainty because they contribute for state income.

“What about the existing businesses? They got their licenses, they follow the requirements. If this is keep happening, all investors will go away…” Firman added there will be serious problem in the future if the business sector is treated unfairly.

He added the administration is sending the signal that investment is not secure if not even the economic industry is protected.

In his opinion, government’s policies and the derivative rules must give solution for what happen in the field. So it is necessary to conduct research and in-depth study from various aspects.

For peatland regulation, there must be clear study which one will destroy the environment and which one will not. The references must be clear.

“What happen is… seems like there’s difference between the research by government and the research by experts,” Firman said. This is matched by reports of the World bank and other studies indication an annual loss of approximately 2-3 percent GDP.

So Firman affirm it is necessary for government to be stern and don’t make policy based on pressure from the foreign interest. According to Firman, lots of the pressure actually due to global business competition and foreign interests.

In July 2014, the House issued a report identifying the “billionaires”-club interest to harm the U.S. economy. Since the election of Donald Trump, the corrections by the new administration, much decried by the environmentalists, are aimed to create a more balanced approach.

Increasingly the voices in Indonesia are questioning the logic behind the populist policies.

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