Articlesslider

Draft of Omnibus Law Bill and its Impact on Spatial Planning Regulation

By March 28, 2020 No Comments

Background

The government has drawn up a draft of the Omnibus Law Bill which consists of Employment Creation Law, Tax Facilities Law and State Capital Law. On 12 February 2020 the chief of the House of Representatives has received an academic paper and a draft of the Employment Creation Law for further discussion. The Employment Creation Law consists of 174 articles and 79 affected laws one of which is Law No. 26 of 2007 concerning Spatial Planning (“Law No. 26/2007“). Article 18 of the Employment Creation Law regulates amendment to Law No. 26/2007 concerning the intervention of the Central Government in regional autonomy, forest area obligations, licensing, fines and community involvement in the stages of drafting up to controlling spatial use.

This writing will only focus on the effect of draft of Employment Creation Law to the Spatial Planning Law of 2007.

Central Government Intervention on Regional Autonomy

With the intention of accelerating the implementation of national strategic programs, Article 8 of Law no. 26/2007 will be amended so that the Central Government can interfere in the preparation and technical guidance of spatial planning preparation at the provincial and district/city levels. In addition, the draft of Employment Creation Law also removes Article 10 and Article 11 of Law No. 26/2007 which originally governs the authority of the Provincial Government and District/City Government in carrying out their functions for i) regulating, developing and supervising spatial management, ii) implementing regional spatial management, iii) implementing regional strategic spatial management and iv) structuring cooperation of interprovincial space and between districts/cities. Article 48 to Article 54 of Law No. 26/2007 which regulates the provisions of rural spatial management will also be deleted. However, the draft of Employment Creation Law does not remove nor amend Article 55 of Law No. 26/2007 so that the authority of the Regional Government is not completely removed and the Regional Government may continue carrying out its supervisory function in the form of receiving reports on the evaluation of activities from businessmen and is entitled to take steps to resolve them in the event of administrative violations.

With the amendment and removal of the aforementioned articles, the draft of Employment Creation Law will decrease the authority of the Regional Government in regulating the spatial layout of its territory. All spatial planning arrangements will be centralized in the Central Government and the functions of the Regional Government are limited to supervision. From the point of view of businessmen or investors, this is an advantage since the elimination of the bureaucracy of the Regional Government will make spatial arrangement less hassle for the businessmen.

Forest Area Obligations

Draft of Employment Creation Law amends Article 17 of Law No. 26/2007 which initially regulates forest area obligations of at least 30% of the watershed area. This provision will be eliminated and amended so that forest area obligations are no longer calculated from the watershed area but based on bio-geophysical conditions, climate, population and socio-economic conditions of the local community.

If the minimum forest area obligation for spatial planning utilization is not clearly stipulated, this has the potential to cause environmental damage, especially in densely populated areas, urban areas and industrial areas.

Licensing

Draft of Employment Creation Law alters the editorial of spatial licensing into Approval of the Suitability of Spatial Use Activities. Article 37 of Law No. 26/2007 related to spatial licensing which was originally issued and revoked by the Central Government and the Regional Government is amended so that the Approval of the Suitability of Spatial Use Activities is only issued and revoked by the Central Government.

The issues related to the difficulties of the Regional Government bureaucracy regarding spatial licensing have been occurring for a long time among business actors. With the simplification and centralization of spatial licensing arrangement it will be good news for businessmen in arranging spatial licensing. This is in line with the main objective of Central Government intervention which is to facilitate opportunities for businesses.

Involvement of Businessmen

Article 65 of Law No. 26/2007 is also amended so that businessmen are allowed to be involved in spatial planning implementation from the drafting stage to spatial use control. Amendment to this article invites businessmen to actively engage in spatial planning and adjust to their business plans so that opportunities for investors are more open.

Fines

The draft of Employment Creation Law amends Article 69 to Article 72 of Law No. 26/2007 which regulates administrative sanctions in the form of fines. Law No. 26/2007 originally regulates the maximum value of fines for violations of spatial planning is Rp. 500,000,000, and in the draft of Employment Creation Law the maximum fine that can be imposed on business actors is higher, ranging from Rp 2,000,000,000 to Rp 4,000,000,000.

Conclusions and Recommendations

Broadly speaking, the main objective of the draft of Employment Creation Law is to open investment opportunities and accelerate national strategic projects. To achieve this purpose, several articles in Law No. 26 of 2007 concerning Spatial Planning will be amended and adjusted. Amendment to Law No. 26/2007 has an impact on 2 aspects, namely in terms of regional autonomy authority and in terms of business actors.

Amendment to Law No. 26/2007 narrows the authority of regional autonomy in regulating spatial planning, including issuing permits related to spatial planning. All spatial planning and licensing will be centralized in the Central Government and the Regional Government is only authorized to supervise the spatial implementation. Meanwhile changes to Law No. 26/2007 are good news for businessmen and potential investors. Simplification of licensing management, reduction related to forest area obligations and the involvement of businessmen in the preparation up to control of spatial use will open opportunities for businessmen and prospective investors to conduct their business activities in Indonesia. However, even though the bureaucracy and spatial licensing have been changed to make it easier for business actors, the government continues to tighten its supervision by raising fines for violations related to spatial planning.

On the other hand, amendment to Law No. 26/2007 related to the elimination of the obligation of 30% forest area will potentially cause environmental damage. It would be better if this obligation is maintained and the Regional Government is given the authority to regulate it to avoid excessive development or use of spatial planning by business actors that can damage the environment or change the nature of the region itself.


Herdiasti Anggitya