Muhammadiyah Challenges Foreign Economic Intervention

Laws 'contradict constitution' and 'potentially causing state loses'

By Concord Consulting
Friday, April 24, 2015

The country’s second largest Muslim organization, Muhammadiyah, has filed three judicial reviews with the Constitutional Court to challenge foreign economic intervention in Indonesia.

Muhammadiyah chairman Din Syamsuddin on April 20 said the reviews focus on the 1999 Foreign Exchange Transaction Law, the 2007 Capital Investment Law and the 2009 Electricity Law.

“These three laws contradict our constitution and are potentially causing state losses,” Syamsuddin said.

The combined lawsuits have been dubbed a ‘constitutional jihad’ by the organization.

Other plaintiffs include University of Indonesia economist Sri Edi Swasono, political economist Ichsanuddin Noorsy and think-tank Indonesian Resource Studies (IRESS) director Marwan Batubara.

Muhammadiyah legal division head Saiful Bahri said the judicial reviews include objections to seven articles of the 1999 Foreign Exchange Transaction Law to reject a free foreign exchange regime.

Bahri said Articles 2 and 3 of the legislation, which allows everyone to own foreign exchange freely, had caused stronger foreign intervention in the domestic economy and high volatility of the rupiah.

Muhammadiyah also challenged Article 12 of the Capital Investment Law, demanding the court limit the number of business fields where foreigners may enter.

The judicial review against the Electricity Law attempts to block foreign investors, according to Bahri.

Muhammadiyah recently achieved a Constitutional Court annulment of the 2004 Water Resources Law that allowed the private sector to monopolize water resources.

The Constitutional Court on February 18 ruled that the law contradicted the Constitution, which stipulates that water is a basic right and mandates the state to control water resources.

The verdict said the private sector could not be granted exclusive rights to water resources, such as rivers, springs, lakes and swamps.

Private firms may apply for licenses to sell a specified amount of water that would be decided by the government and local residents, it said.

The court has also banned the sale of clean water to other countries and reinstated the previous 1974 Water Law until a new law is enacted.

This translation of local press accounts courtesy of Concord Consulting 

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