More Regulations May Lead to More Corrupt Government
Amid worry among the global community that 2023 will be filled with new challenges, the government decided to issue a regulation in lieu of the job creation law last December. This regulation has sparked prolonged debates on the pros and cons.
Perhaps there aren’t many who are aware of who is Publius Cornelius Tacitus. But truly, he is not a fictional character. He was a senator and a historian back in ancient Rome in 56 AD - 117 AD and wrote countless pieces of literature, including ‘The Annals of Imperial Rome’. From his observation of the Roman government and other empires in Europe at that time, Tacitus concludes that the more corrupt a government is, the more regulations are made. This logic applies vice-versa: the more rules the government made, the more corrupt the government will be.
His opinion might not align with many people in the internet of things and artificial intelligence era right now, but when thought about clearly and honestly, Tacitus is right.
Regulation vs Deregulation
Not sure if it is inspired by Tacitus’ opinion or not, the government under the leadership of President Joko "Jokowi: Widodo initiated the regulation to shorten, simplify, and align various regulations in the central government as well as in areas that cause a high-cost economy. The goal of this regulation is to create quality economic growth and increase employment.
Along with it, another goal the government hopes to achieve is a drastic decrease in corruption, collusion, and nepotism in the national economy.
In other words, the issuance of a regulation in lieu of the job creation law is essentially deregulation. Though one must admit as a human creation, the law still has its flaw.
Indonesia’s and the global economic condition wasn’t exactly at its best after the 2020 job creation law was issued. The economy was getting worse in 2021, then entering the second quarter of 2022, the global economy began to be fragmented -- not only did global value chains become more challenging after Covid-19 but also because the war between Russia and Ukraine further disrupted what was left of 2021.
It's not easy to reform the economy when the value chains freeze due to the geopolitical activities of the big powers, regionally and globally.
Last year, economists and trade observers got used to reading news about trade coercions and countries weaponizing trade policies with threats to freeze and seize other countries’ assets or implementing beggar thy-neighbor policy’ to solve domestic issues but - purposely or not - causes a negative effect for other countries.
Since Indonesia does not live in a sterile silo, the recent developments can cause negative implications to the national economy: disruption in the global supply chain; weakening of the exchange rate that will influence a country’s ability to import industrial needs for exports; decreased demands of the main export destination country; and other disruptions in the global value chain.
Amid growing uncertainty, it is such a relief that the government carries on deregulation with the replacement of the job creation law. It certainly is easy to take the other option and return to regulation. Moreover, many other countries including economically advanced countries return to mercantilist regulation with the high cost and prioritize ‘growth’ and not ‘quality growth’ like what the government expects by publishing the law.
What 2023 Will Bring
Wise men said: 'in every cloud, there is a silver lining". Without having to be complacent or arrogant, economic uncertainty this year must be faced smartly. How? A strong collaboration between all stakeholders, starting from central and local government, big, medium, small, or even micro businesses, universities, and workers in all sectors to the general public.
Various unsatisfaction with the law might need to be paused for a minute. The government discovered an on-point policy mix to implement and push productive sectors to provide a decent work field. New businesses must also set a strategy to withstand the upcoming waves of uncertainty and this requires enough time and space to maneuver.
Around a year before the general elections, there is a possibility the government will publish seemingly needed regulations to maintain strong economic growth. Here, the people need to keep an eye on the trial and error phase of implementing the regulation: whether the objective is clear, focused, and doable; whether there is an objective mechanism to measure the achievements; whether there is a sunset clause if at any point it must be ended; and whether there is a supervision mechanism so there will not be any overlapping regulation; whether there is internal supervision (by the government) and external supervision (by businesses and the people), and many more.
Iman Pambagyo is a former Director General of International Trade Negotiation of the Trade Ministry and a former Indonesian Ambassador to the World Trade Organization. The views expressed in this article are those of the author.Tags: