Indonesia is aligning with global norms for social justice and development, particularly in light of this year’s World Social Justice Day theme, “Renewed Commitment to Social Development and Social Justice.” A renewed pledge between the Indonesian government and employers emphasizes responsible business conduct and human rights due diligence.
Government Mandates Human Rights Due Diligence
The Indonesian government plans to issue a presidential regulation (Perpres) by 2028 that will mandate human rights due diligence (HRDD). This regulation will apply to companies with more than 2,000 employees, all exporting companies and their supply chains, and specific high-risk industrial sectors. The new regulation is intended to replace previous voluntary measures outlined in Perpres No. 60/2023 and the Human Rights Ministry’s PRISMA platform, which focused on self-assessments.
Global Trade and OECD Membership
The push for a new Perpres is also a response to evolving global trade dynamics. The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) and Germany’s Supply Chain Act are now in effect, requiring mandatory human rights reporting for access to premium markets. Indonesia’s aspiration to join the Organisation for Economic Co-operation and Development (OECD) also relies on demonstrating enforceable standards for ethical business conduct. The draft regulation seeks to balance productivity with essential labor protections.
Implementation Challenges
While the proposed Perpres represents a promising step, challenges remain in ensuring its effective implementation. Addressing these challenges swiftly is crucial to ensure the regulation becomes a catalyst for change.
