Drunk over Liquor Regulation
The President revoked clauses in a regulation that he signed regarding the liberalization of investment in the liquor industry. This is proof of the ramshackle way regulations are drawn up in this country.
THE decision by President Joko Widodo to revoke the regulation on the liberalization of investment in the liquor industry, after previously agreeing to it, teaches us two things. Firstly, it is clear that Jokowi is easily persuaded to give in to demands made in the name of religion, especially Islam. Secondly, there are fundamental problems with the transparency of the lawmaking process in this country.
The regulation in question is Presidential Regulation No. 10/2021 on investment in business sectors, particularly the matter of investment in the liquor industry. President Jokowi signed the regulation on February 2. Like all regulations that have arisen from Law No. 11/2020 on job creation, this regulation was pushed through in a hurry so it could quickly come into force. But quick does not mean safe. After less than a month, at the beginning of March, the President hastily revoked the relevant clause.
Before being revoked, the new provision allowed for foreign investment in the liquor industry in only four provinces, namely Bali, East Nusatenggara, North Sulawesi, and Papua. This policy amended Presidential Regulation No. 39/2014 that added the liquor industry to the list of sectors closed to foreign investment.
It is here that the first indications of a problem arose. In other nations, the liquor industry is a part of local culture that is protected by law. Look at how France protects its wine industry or how Ireland regulates the production of whisky there. The move to allow foreign investment by officials at the coordinating ministry for the economy had the potential to finish off traditional liquor manufacturers in Indonesia. Producers of traditional alcoholic drinks such as arak in Bali, sopi in East Nusa Tenggara, cap tikus in North Sulawesi, and swansrai in Papua would have been overwhelmed by competition from beer companies from Europe, the United States, and Australia.
On the other hand, some tried to put a different spin on this liquor investment regulation. Rumors rapidly spread that the regulation was a part of the government’s endeavor to legalize the trade in liquor. Once again poor public communication from the government was the root of this problem. If the explanation by Investment Coordinating Board Chairman Bahlil Lahadalia had been true, objections could have been anticipated from the outset. But mass organizations such as the Nahdlatul Ulama and Muhammadiyah say they were not consulted at all. In other words, this important regulation was issued without satisfactory public consultation.
The government’s claim that it always listens to the voice of the people once again has turned out to be simply lip service. Jokowi’s decision to revoke the clause on foreign investment in the liquor industry does not automatically mean the opposite. Many public objections on other regulations with similar problems are still being ignored. There was, for example, no satisfactory government response to the strong reaction of hundreds of thousands of people to the revision of the Corruption Eradication Commission Law at the end of 2019 and the opposition to the Job Creation Law throughout 2020.
It is no surprise that there are suspicions regarding the President’s motive in revoking the clause related to the liberalization of investment in the liquor industry. Many accuse Jokowi of only reacting if protests are in the name of Islam. Granted, it is impossible to avoid the impression that the President is very accommodative, if not afraid, of aspirations linked to Islamic sentiment. The policy inconsistencies reflected in this case could lead to investors becoming even more reluctant to put their money into Indonesia.