The red carpet investments in the middle of a pandemic result in crisis of people’s sovereignty

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Indonesia for Global Justice - 7 September 2020

The red carpet investments in the middle of a pandemic result in crisis of people’s sovereignty

Indonesian Civil Society Coalition for Justice Economy assesses the national economic recovery strategy by strengthening policies economic liberalization focusing only on investment and exports will only be increasingly open space for corporate monopoly on economic resources which have an impact on loss of economic justice towards the main actors of the people’s economy such as peasants, fishermen, small medium enterprises (UKM), and women. This issue was stated in a Press Conference held by the Coalition on (7/9) in Jakarta.

The Government of Indonesia responded to the national economic recovery strategy through the creation of investment momentum to increase exports by intensifying the negotiation of international trade and investment agreements, as well as the Omnibus Job Creation Bill. Therefore, this coalition urges the Government and the House of Representatives of the Republic of Indonesia to stop discussing the Omnibus Law and not ratify all forms of international trade and investment agreements (WTO, FTA, and BIT), particularly in the midst of a pandemic.

The Director of Indonesia for Global Justice (IGJ), Rachmi Hertanti, explained the agenda of Global Value Chain that is staying by the Government in the FTA and Omnibus Law will only be facilitating corporate interests without a concrete protection mechanism for the people who are marginalized from the policy. This is what brings up widespread criticism from the people. Rachmi conveyed three critical notes from IGJ regarding the policy:

“we urge the Government and the House of Representatives of the Republic of Indonesia not to carelessly ratify the FTA and passed the Ommibus Law for the Global Value Chain. Many people’s rights are being sacrificed. Global value chain agenda through passivation of the ratification of the FTA which is legitimized by the Omnibus Law has resulted in a crisis of people’s sovereignty. We have three points of criticism upon this policy: first, the expansion of the ratification of trade agreements and investment is against the Constitution; second, giving the red carpet to investment is not accompanied by a commitment to protect human rights by the state; and third, accelerating discussion of the omnibus law and ratification of international trade agreements amid a pandemic is a form of humanitarian crisis,” stressed by Rachmi.

At the moment, Indonesia is negotiating a free trade agreement, among them are Regional Comprehensive Economic Partnership (RCEP) and Indonesia European Union CEPA (I-EU CEPA), as well as several of them are waiting for ratification such as IA CEPA, I-EFTA CEPA, IKorea CEPA, etc. Apart from that, the Government of Indonesia is also negotiating a bilateral investment agreement with Switzerland.

The red carpet for this investment actually often causes problems upon state sovereignty which opens up the potential of the state being sued by corporations. This problem rise up from the commitments made by the Government of Indonesia in various international trade and investment agreements. Lutfiyah Hanim, Researcher of TWN (Third World Network), stated that ratifying the FTA (free trade agreement ) and BIT (bilateral investment treaty ) which regulates investment protection has big consequences for the state policy space, especially regarding the mechanism investment disputes between corporations and the state (Investor-State Dispute Settlement ) is also being committed. Hanim continued the investment agreement and investment chapter, that is put forward excessively on investor protection that may sue the state through the ISDS ( Investor State Dispute Settlement) mechanism in arbitration international.

Therefore, civil society groups around the world expressed their concern over this situation. Their concerns are attached including the mentioning of the time when state resources are running low due to they have to respond to the crisis, public funds should not be diverted from the efforts to save lives, jobs and living space to pay ISDS damages claim or the high ISDS case costs And considering the ongoing battle against COVID-19, the series of cases that have emerged to this day will result in a ‘regulatory chilling effect’, where the government removes, postpones, and even withdraws policy steps aimed at tackling the pandemic solely to avoid lawsuits, and this kind of indemnity, and it can be fatal.

Kartini Samon from the Civil Society Coalition for Economic Justice stated that the Covid-19 pandemic should make us see how much we depend on peasants, fishermen, local farmers and other small food producers. What has recently been displaced is due to various giant infrastructure investment projects, grabbing of space, land, water, sea, binding free market policies and eliminating their rights. ISDS and other policies that only protect major investors and entrepreneurs will only be detrimental and make it difficult to overcome the current health crisis, social, economic crisis and food crisis.

“In May 2020, the Government submitted 89 National Strategic Projects (PSN) for the 2020-2024 period, one of which was recommending a food estate project in Central Kalimantan. A large-scale food estate development project have proven to have failed in strengthening the food sovereignty of the people. Most of them contain the gloomy disadvantages of the impacts of these massive projects, such as the Peatland Development (PLG) Project for Food Crop Agriculture in Central Kalimantan Province, or the Merauke Food and Energy Estate which all failed to meet expectations. Providing space for investors to sue the state on projects that can harm the community at large will further add to the burden on the state itself in the future,” as being stated by Kartini Samon.

Parid Ridwanuddin, the People’s Coalition for Fisheries Justice (KIARA), emphasized that the Indonesian government’s efforts to provide the red carpet for foreign investors can be seen clearly in the acceleration of deliberations on the Job Creation Bill which is now receiving serious resistance from various elements of the society in Indonesia. This bill has two fundamental weaknesses, namely in terms of procedure and substance.

“In terms of drafting procedures, this bill only involves businessmen, politicians and a handful of academics who support the government. The people who will be affected, such as fishermen and coastal communities, are not involved at all,” he explained.

Parid added, the article which discusses foreign investment in small islands in the Job Creation Bill is highly dangerous for coastal communities, because of several things: first, the Job Creation Bill does not provide limitations and conditions for foreign investment actors as regulated in great detail in Law no. 1 of 2014; second, eliminating social considerations, especially the life of coastal communities, and ecological considerations, particularly the ecosystem of small islands and the surrounding waters; third, eliminating the role of local government, in this case the regent or mayor. The Job Creation Bill appears to be undertaking a recentralization of power to facilitate investment in small islands and surrounding waters.
Among the projects in coastal areas and small islands that are currently being processed for permits by the Government of Indonesia are the deep sea mine tailings placement (DTSP) project in Central Sulawesi and North Maluku Provinces. The permit process was employed for four nickel mining companies, namely: PT. Trimegah Bangun Persada (TBP) and PT. QMB New Energy Material on Obi Island, which is in South Halmahera Regency, North Maluku Province; PT. Huayue Nickel Cobalt (HNC) and PT Sulawesi Cahaya Mineral in Morowali, Central Sulawesi Province.

“If the government really allows the DTSP project, fishermen will suffer the most because the waters which are the fishing grounds will be destroyed and polluted. This project will clearly destroy the living space of traditional fishermen or small scale fishermen who depend on the fisheries sector in the two provinces,” stated by Parid.
The KIARA Data and Information Center (2020) notes that at least 7,153 families of fishermen in Morowali Regency will be affected by the PT. Huayue Nickel Cobalt (HNC) and PT. Sulawesi Cahaya Minerals. Furthermore, KIARA notes that as many as 3,016 fishermen on Obi Island will also be affected by the PT. Trimegah Bangun Persada (TBP) and PT. QMB New Energy Material. The total of 3,016 fishermen consists of 833 fishermen in South Obi sub-district, 491 fishermen in Obi sub-district, 348 fishermen in East Obi sub-district, and 1,344 fishermen in North Obi sub-district.

“What can be proud of a nickel mining investment in Morowali waters and Obi Island waters, if the sea is polluted and thousands of traditional or small-scale fishermen lives are destroyed?” asked Parid.

Sigit Karyadi Budiono from the People’s Coalition for the Right to Water (KRuHA) stated that all the efforts of the Government and the House of Representatives by encouraging the acceleration of discussion of various bills and investment and trade agreements actually marked the era of total liberalization post 1998. The state seemed to have jumped backwards in the orientation of policy making, hence what happens is a political ignorance of the people’s interests. The state voluntarily surrenders itself into the confinement of what is conceptually known as regulatory captured by capitalism.

“This reading shows us that today’s regime has handed over Indonesia as part of the process of reorganizing and reconfiguring the global scale space for the liberalization project of the market economy through the expansion of production, distribution and capital reproduction. This will certainly aggravate the struggle for people’s rights, including agrarian sources; land, water, etc., then transformed from a collective right of ownership (res commune) to appear as if they had no owner (res nullius) thus they could be controlled by individuals and ultimately resulted in the commercialization of land, water and commercialization of space. That is what is utmost important for the people to pay attention to in seeing the work and the consequences of today’s regime,” concluded by Sigit.
For further information, please contact:
Rachmi Hertanti, Director of IGJ, +62 817-4985-180
Kartini Samon, MKE Coalition Researcher, +62 813-1476-1305
Lutfiyah Hanim, TWN Researcher, +62 813-1665-3221
Parid Ridwanuddin, KIARA, +62 812-3745-4623
Sigit K. Budiono, KRuHA, +62 813-1883-5393

Civil Society Coalition for Economic Justice:
Indonesia for Global Justice (IGJ), Indonesia AIDS Coalition (IAC), Koalisi Rakyat untuk Hak Atas Air (KRuHA), Koalisi Rakyat untuk Kedaulatan Perikanan (KIARA), Solidaritas Perempuan, Wahana Lingkungan Hidup Indonesia (WALHI), Kesatuan Nelayan Tradisional Indonesia (KNTI), Serikat Petani Indonesia (SPI), Indonesia Human Rights Committe for Social Justice (IHCS), Kesatuan Perjuangan Rakyat (KPR)