An official from the Coordinating Ministry for the Economy said that unlike what a number of critics including environmentalists have said, a draft Omnibus Law on Job Creation will not drop requirements for an environmental impact analysis (Amdal) when applying for an investment license.
“We are not eliminating environmental licenses. Not at all,” Ihsan Zulkarnaen, Assitant to the Deputy for Investment Development at the Coordinating Ministry for the Economy, said addressing a workshop here on Wednesday (4/3.)
Ihsan said that one of the aims of the draft law was to simplify permit application and issuance. It seeks to introduce a reform, by changing the current license-based approach in the process to one that is based on the risk faced by each sector.
A number of critics, including environmental groups, have aired worries that the draft Omnibus Law heavily favored ease of investment to the detriment of the environment and the interest of the people in general, including the labor force.
They also said that the draft law even threatened the environment by eliminating a requirement for any investment to provide an environmental impact analysis when applying for a permit.
Ihsan said that the draft law will not eliminate the requirement for Amdal but would rather keep it for investment in sectors posing high risks to the environment while replacing it with simpler requirement for those posing low risks.
“If we used to have license-based approach, now we are changing the paradigm into a risk-based approach,” he said.
He said that under the current system, any investment, big or small, would need to undergo the same “tedious” process to obtain permits or licenses. The Draft Omnibus Law, he said, would differentiate investments and sectors based on their risks.
“If the business field poses low risks, then there would be no need for a permit, they would only need to register,” explains Ihsan.
He took the example of an investment for a power generating plant and one for opening a convenience store. While under the current system both would have seek a license, the Omnibus Law would scrap the need for a permit for the low-risk convenience store and such an investment would only be required to register with the authorities.
“Businesses in the environment sector which carry high risks, must seek a license, must submit an Amdal, while those carrying low risks would not need to submit an Amdal, but an UKL-PKL will suffice,” he said referring to the Environmental Management Efforts (UKL) and Environmental Monitoring Efforts (PKL), two statements of commitments.
The determination of the degree of risks carried by a sector will be made by the concerned ministry together with the Coordinating Ministry for the Economy, Ihsan said, adding that also taken into consideration would be the factor of whether or not there were known ways to manage, lessen or overcome a particular risk.
Although carrying a high risk, but if there were ways to manage, lessen or overcome the risk, a sector could incur a lower risk classification, A low risk sector may also be classified under a higher risk status if there were no way known to manage, lessen or overcome the risk.
“We want to affirm that we are not actually revoke an authority, not change the business process. It will only reposition (the risks and requirements). The proof is that environment license stays but we will reposition the way to require it,” Ihsan said.
The aims of the Draft Omnibus Law on Job Creation, according to him, was to assist the country in reaching its Indonesia 2045 vision, in which the country has become the fifth if not the fourth largest economy in the world. This, he said, would mean a need to draw a lot of investment, create a lot of jobs while at the same time not forgetting to assure a sustainable environment.