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Indonesia: Police Fire Water Cannons at Protesters Rallying Against Jobs Law

Critics of the omnibus law, which revises more than 70 existing laws, say it is too pro-business with its removal of labour protections and relaxation of environmental rules.

Jakarta: Indonesian police used water cannons and tear gas on Tuesday to disperse protesters rallying against a new jobs law in two cities on the island of Java, according to a police spokesman and media reports.

Earlier, thousands of workers and students had protested peacefully across the archipelago at the start of a three-day national strike against President Joko Widodo’s “omnibus” Job Creation bill, which was passed into law on Monday.

Elshinta radio posted a video on its official Twitter account showing police late in the evening using water cannons against hundreds of protesters in the city of Serang in Banten province, about 70 km (43.5 miles) to the west of Jakarta.

Banten police spokesman Edy Sumardi Priadinata said via text message that the situation was under control by 9:15 pm local time and that two police officers had been injured by rocks thrown at them, but did not respond to further queries.

In Bandung, the capital of West Java province, police used tear gas against protesters who hurled rocks and firecrackers and damaged a police car, according to news website Detik.com.

The website also reported police had arrested 10 protesters.

The spokesman of West Java police could not immediately be reached for comment.

There was no significant demonstration in Jakarta. Police blocked workers from protesting in front of the national parliament, citing the need to contain the spread of the coronavirus.

A man holds a sign reading “Reject the omnibus law” as members of Indonesian trade unions protest against the government’s proposed labour reforms in a controversial “jobs creation” bill in Tangerang, on the outskirts of Jakarta, Indonesia October 5, 2020. The picture was taken on October 5, 2020, by Antara Foto. Antara Foto/Fauzan/via REUTERS

Critics of the omnibus law, which revises more than 70 existing laws to accelerate reform of Southeast Asia’s largest economy, say it is too pro-business with its removal of labour protections and relaxation of environmental rules.

Government officials say the law relaxes rigid labour rules and streamlines environmental rules in order to improve the investment climate and create jobs.

Markets welcome law

Indonesian markets cheered the passage of the bill, with the main stock index up as much as 1.31% and the rupiah reaching as high as 1.28%, before paring some gains.

The Indonesia Investment Coordinating Board, a government agency, said it would lead to better welfare for workers by facilitating more foreign investment.

Also read: Indian Services Sector Activity Remains in Contraction Zone in September, Job Losses Widen: PMI

Citibank, in a research note, said the law simplifies business licensing and addresses restrictive trade and labour policies, but added that immediate foreign investment was unlikely in the currently depressed global economic climate.

Trimegah Securities economist Fakhrul Fulvian said banks and export-oriented industries should benefit from the law, while consumer and retail sectors may be pressured as workers may increase savings to compensate for changes in labour rules.

However, many Indonesians criticised the law on Twitter, with one trending hashtag incorporating an expletive against parliament and another calling lawmakers traitors.

(Reuters)

The Rise of Phantom Investments

Financial and tax engineering blurs as a result of phantom investments and shell companies can make it difficult to understand genuine economic integration.

Washington: According to official statistics, Luxembourg, a country of 600,000 people, hosts as much foreign direct investment (FDI) as the United States and much more than China. Luxembourg’s $4 trillion in FDI comes out to $6.6 million a person.

FDI of this size hardly reflects brick-and-mortar investments in the minuscule Luxembourg economy. So, is something amiss with official statistics or is something else at play?

FDI is often an important driver for genuine international economic integration, stimulating growth and job creation and boosting productivity through transfers of capital, skills, and technology.

Therefore, many countries have policies to attract more of it. However, not all FDI brings capital in service of productivity gains. In practice, FDI is defined as cross-border financial investments between firms belonging to the same multinational group, and much of it is phantom in nature – investments that pass through empty corporate shells.

These shells, also called special purpose entities, have no real business activities. Rather, they carry out holding activities, conduct intrafirm financing, or manage intangible assets – often to minimise multinationals’ global tax bill.

Such financial and tax engineering blurs traditional FDI statistics and makes it difficult to understand genuine economic integration.

Also read: Three RBI Surveys Paint a Picture of an Economy Still in a Funk

Better data are needed to understand where, by whom, and why $40 trillion in FDI is being channelled around the world. Combining the Organisation for Economic Co-operation and Development’s (OECD) detailed FDI data with the global coverage of the IMF’s Coordinated Direct Investment Survey, a new study (Damgaard, Elkjaer, and Johannesen) creates a global network that maps all bilateral investment relationships – disentangling phantom FDI from genuine FDI.

Interestingly, a few well-known tax havens host the vast majority of the world’s phantom FDI. Luxembourg and the Netherlands host nearly half. And when you add Hong Kong SAR, the British Virgin Islands, Bermuda, Singapore, the Cayman Islands, Switzerland, Ireland, and Mauritius to the list, these 10 economies host more than 85% of all phantom investments.

Why and how does this handful of tax havens attract so much phantom FDI?

In some cases, it is a deliberate policy strategy to lure as much foreign investment as possible by offering lucrative benefits – such as very low or zero effective corporate tax rates.

Even if the empty corporate shells have no or few employees in the host economy and do not pay corporate taxes, they still contribute to the local economy by buying tax advisory, accounting, and other financial services, as well as by paying registration and incorporation fees. For the tax havens in the Caribbean, these services account for the main share of GDP, alongside tourism.

In Ireland, the corporate tax rate has been lowered substantially from 50% in the 1980s to 12.5% today. In addition, some multinationals take advantage of loopholes in Irish law by using innovative tax engineering techniques with creative nicknames like “double Irish with a Dutch sandwich,” which involves transfers of profits between subsidiaries in Ireland and the Netherlands with tax havens in the Caribbean as the typical final destination.

These tactics achieve even lower tax rates or avoid taxes altogether. Despite the tax cuts, Ireland’s revenues from corporate taxes have gone up as a share of GDP because the tax base has grown significantly, in large part from massive inflows of foreign investment.

This strategy may be helpful to Ireland, but it erodes the tax bases in other economies. The global average corporate tax rate was cut from 40% in 1990 to about 25% in 2017, indicating a race to the bottom and pointing to a need for international coordination.

Globally, phantom investments amount to an astonishing $15 trillion, or the combined annual GDP of economic powerhouses China and Germany.

And despite targeted international attempts to curb tax avoidance – most notably the G20 Base Erosion and Profit Shifting (BEPS) initiative and the automatic exchange of bank account information within the Common Reporting Standard (CRS) – phantom FDI keeps soaring, outpacing the growth of genuine FDI.

In less than a decade, phantom FDI has climbed from about 30% to almost 40% of global FDI (see chart). This growth is unique to FDI. According to Lane and Milesi-Ferretti (2018), FDI positions have grown faster than world GDP since the global financial crisis, whereas cross-border positions in portfolio instruments and other investments have not.

While phantom FDI is largely hosted by a few tax havens, virtually all economies – advanced, emerging market, and low-income and developing – are exposed to the phenomenon.

Most economies invest heavily in empty corporate shells abroad and receive substantial investments from such entities, with averages across all income groups exceeding 25% of total FDI.

Investments in foreign empty shells could indicate that domestically controlled multinationals engage in tax avoidance. Similarly, investments received from foreign empty shells suggest that foreign-controlled multinationals try to avoid paying taxes in the host economy. Unsurprisingly, an economy’s exposure to phantom FDI increases with the corporate tax rate.

Globalisation creates new challenges for macroeconomic statistics. Today, a multinational company can use financial engineering to shift large sums of money across the globe, easily relocate highly profitable intangible assets, or sell digital services from tax havens without having a physical presence.

These phenomena can hugely impact traditional macroeconomic statistics—for example, inflating GDP and FDI figures in tax havens. Prominent cases include Irish GDP growth of 26% in 2015, following some multinationals’ relocation of intellectual property rights to Ireland, and Luxembourg’s status as one of the world’s largest FDI hosts. To get better data on a globalised world, economic statistics also need to adapt.

Also read: Can India’s Rich Wealth Creators Boost the Economy to $5 Trillion?

The new global FDI network is useful to identify which economies host phantom investments and their counterparts, and it gives a clearer understanding of globalisation patterns. Such data offer greater insight to analysts and can guide policymakers in their attempt to address international tax competition.

The taxation agenda has gained traction among the G20 economies in recent years. The BEPS and CRS initiatives are examples of the international community’s efforts to tackle weaknesses in the century-old tax design, but the issues of tax competition and taxing rights remain largely unaddressed.

However, this seems to be changing with emerging widespread agreement on the need for significant reforms. Indeed, this year the IMF put forward various alternatives for a revised international tax architecture, ranging from minimum taxes to allocation of taxing rights to destination economies.

No matter which road policymakers choose, one fact remains clear: international cooperation is the key to dealing with taxation in today’s globalised economic environment.

(IPS)

Hackers Launch Global Cyber Attack With Stolen NSA Hacking Tool

A global cyber attack using NSA’s hacking tools has hit international shipper FedEx, Britain’s health system and infected computers in nearly 100 countries.

People pose in front of a display showing the word ‘cyber’ in binary code, in this picture illustration taken in Zenica December 27, 2014. Credit: Reuters/Dado Ruvic/Files

London/Madrid: A global cyber attack leveraging hacking tools widely believed by researchers to have been developed by the US National Security Agency hit international shipper FedEx, disrupted Britain’s health system and infected computers in nearly 100 countries on Friday.

Cyber extortionists tricked victims into opening malicious malware attachments to spam emails that appeared to contain invoices, job offers, security warnings and other legitimate files.

The ransomware encrypted data on the computers, demanding payments of $300 to $600 to restore access. Security researchers said they observed some victims paying via the digital currency bitcoin, though they did not know what percent had given in to the extortionists.

Researchers with security software maker Avast said they had observed 57,000 infections in 99 countries with Russia, Ukraine and Taiwan the top targets.

The most disruptive attacks were reported in Britain, where hospitals and clinics were forced to turn away patients after losing access to computers.

International shipper FedEx Corp said some of its Windows computers were also infected. “We are implementing remediation steps as quickly as possible,” it said in a statement.

Still, only a small number of US-headquartered organisations were hit because the hackers appear to have begun the campaign by targeting organisations in Europe, said Vikram Thakur, research manager with security software maker Symantec.

By the time they turned their attention to the United States, spam filters had identified the new threat and flagged the ransomware-laden emails as malicious, Thakur said.

The US Department of Homeland Security said late on Friday that it was aware of reports of the ransomware, was sharing information with domestic and foreign partners and was ready to lend technical support.

Telecommunications company Telefonica was among many targets in Spain, though it said the attack was limited to some computers on an internal network and had not affected clients or services. Portugal Telecom and Telefonica Argentina both said they were also targeted.

Private security firms identified the ransomware as a new variant of “WannaCry” that had the ability to automatically spread across large networks by exploiting a known bug in Microsoft’s Windows operating system.

“Once it gets in and starts moving across the infrastructure, there is no way to stop it,” said Adam Meyers, a researcher with cyber security firm CrowdStrike.

The hackers, who have not come forward to claim responsibility or otherwise been identified, likely made it a “worm,” or self-spreading malware, by exploiting a piece of NSA code known as “Eternal Blue” that was released last month by a group known as the Shadow Brokers, researchers with several private cyber security firms said.

“This is one of the largest global ransomware attacks the cyber community has ever seen,” said Rich Barger, director of threat research with Splunk, one of the firms that linked WannaCry to the NSA.

The Shadow Brokers released Eternal Blue as part of a trove of hacking tools that they said belonged to the US spy agency.

Microsoft on Friday said it was pushing out automatic Windows updates to defend clients from WannaCry. It issued a patch on March 14 to protect them from Eternal Blue.

“Today our engineers added detection and protection against new malicious software known as Ransom: Win32. WannaCrypt,” Microsoft said in a statement. It said the company was working with its customers to provide additional assistance.

Sensitive timing

The spread of the ransomware capped a week of cyber turmoil in Europe that kicked off a week earlier when hackers posted a huge trove of campaign documents tied to French candidate Emmanuel Macron just 1-1/2 days before a run-off vote in which he was elected as the new president of France.

On Wednesday, hackers disputed the websites of several French media companies and aerospace giant Airbus. Also, the hack happened four weeks before a British parliamentary election in which national security and the management of the state-run National Health Service (NHS) are important campaign themes.

Authorities in Britain have been braced for possible cyber attacks in the run-up to the vote, as happened during last year’s US election and on the eve of this month’s presidential vote in France.

But those attacks – blamed on Russia, which has repeatedly denied them – followed an entirely different modus operandi involving penetrating the accounts of individuals and political organisations and then releasing hacked material online.

On Friday, Russia’s interior and emergencies ministries, as well as the country’s biggest bank, Sberbank, said they were targeted. The interior ministry said on its website that around 1,000 computers had been infected but it had localised the virus.

The emergencies ministry told Russian news agencies it had repelled the cyber attacks while Sberbank said its cyber security systems had prevented viruses from entering its systems.

New breed of ransomware

Although cyber extortion cases have been rising for several years, they have to date affected small-to-mid-sized organisations, disrupting services provided by hospitals, police departments, public transportation systems and utilities in the United States and Europe.

“Seeing a large telco like Telefonica get hit is going to get everybody worried. Now ransomware is affecting larger companies with more sophisticated security operations,” Chris Wysopal, chief technology officer with cyber security firm Veracode, said.

The news is also likely to embolden cyber extortionists when selecting targets, Chris Camacho, chief strategy officer with cyber intelligence firm Flashpoint, said.

“Now that the cyber criminals know they can hit the big guys, they will start to target big corporations. And some of them may not be well prepared for such attacks,” Camacho said.

In Spain, some big firms took pre-emptive steps to thwart ransomware attacks following a warning from Spain’s National Cryptology Centre of “a massive ransomware attack.”

Iberdrola and Gas Natural, along with Vodafone’s unit in Spain, asked staff to turn off computers or cut off internet access in case they had been compromised, representatives from the firms said.

In Spain, the attacks did not disrupt the provision of services or networks operations of the victims, the government said in a statement.

(Reuters)

Protecting the Rights of Women Migrant Workers

Most women migrant workers contribute more than men in destination countries but face added risks of in of discrimination, abuse and exploitation.

Women migrant workers. Credit: UN

United Nations: International migration is a complex phenomenon dealing with overlapping issues relating to the human rights of migrants, mixed migration flows, international protection, smuggling and trafficking, as well as other push and pull factors affecting migration.

But, the need of the hour is a rights-based comprehensive approach placing the human rights of migrants at the centre of the discussion to halt and roll back overall deterioration of treatment of migrant workers, worldwide – in particular, women migrant workers and children.

Evidence suggests that the world is on the eve of far greater international mobility largely due to work force decline and population ageing, coupled with low birth rates in many industrialised countries. Migrants will be even more essential to address labour market needs and the sustainability of economic development in many countries.

But as we all know, migrants move due to a number of reasons. Migration is not only due to economic factors – man-made disasters and conflicts can drive them in large number as we observe now.

And migration can be engendered due to poverty and lack of human development, gender inequalities, discrimination, abuse and neglect, gang violence, political instability, socio-ethnic tensions, bad governance, food insecurity, environmental degradation and climate change.

As underscored by many human rights defenders, human rights abuses play a crucial role in decisions to migrate, in particular by women.

Out of more than 244 million migrants throughout the world, half are women, and an estimated 20% are in an irregular situation. In some countries like Sri Lanka and the Philippines, female migrant workers leaving for work abroad are much more than half of those leaving.

And in overall, international migration is becoming increasingly feminised as more women are migrating on their own volition, seeking economic and social opportunities and empowerment through migration.

Most women contribute more than men in destination countries in professions, such as care-givers while contributing even more to the well-being of their families in their countries of origin. But, women migrant workers are particularly at risk of discrimination, abuse and exploitation.

They receive wages that are under the minimum baseline and are victims of fraudulent practices, excessive working hours and even illegal confinement by their employers. Sexual harassment, threats and intimidation against them are rampant.

Meanwhile, the number of women migrant workers committing suicide is on the increase. Abuses of women migrant workers are more intensified when their immigration status is irregular. They are often denied the most basic labour protections, personal security, due process guarantees, health care and education for their children. They often face abuse and harassment at international borders based on race, identity and age. And often they risk being trafficked, enslaved or sexually assaulted.

Domestic female migrant workers are a most vulnerable group. According to the International Labour Organisation (ILO), 53 million women and girls around the world are employed as domestic workers in private households. They clean, cook, care for children, look after elderly family members and perform other care giving essential tasks for their employers.

Despite their important role, they are among the most exploited and abused workers in the world. They often work 14 to 18 hours a day, seven days a week, for wages far below the minimum wage. And their work is often not recognised as work under national labour codes.

Their work is not quantified in financial terms and therefore not adequately compensated. They may be locked within their workplace and subject to physical and sexual violence for lack of means for seeking formal protection normally available for other women in formal sectors of employment.

Therefore, policymakers and other stakeholders in every country must adopt a gender-sensitive and rights based approach in developing labour migration laws and policies in line with the core human rights treaties and in particular the Convention on the Elimination of all Forms of Discrimination Against Women, and the Committee on Migrant Workers (CMW), as well as relevant ILO labour standards.

These human rights instruments relevant to migrants seek to achieve gender equality and protection for women and girls irrespective of age, sexuality, race, disability, migration status and other identity markers.

National and local laws and policies should be evolved to guarantee that human rights, including labour rights, are enjoyed equally by men and women migrant workers and that migration legislation, policies and programmes must promote equality of opportunity and treatment in respect of employment and occupations with a view of eliminating any discrimination based on sex.

In this regard, female domestic workers must receive special attention, as they are most vulnerable group. The Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families is a robust and agreed legal framework for the rights of all migrant workers and their families in countries of origin, transit and destination.

The convention sets out the best strategy to prevent abuses and address challenges faced by female migrant workers. It provides guidance for elaborating of national migration policies for international co-operation based on respect for human rights and the rule of law.

In addition to setting minimum obligations for the protection of migrant workers and members of their families, the convention is a helpful tool for governance of migration. The convention explicitly provides a framework for human-rights based policy-making on migration, including irregular migration and female migrant workers.

The treaty body of the convention, the CMW seeks to encourage its state parties and all stakeholders to work towards reaching standard enunciated in this convention and other relevant international instruments. And CMW in its general comments have elaborated guidance as to how states can implement their obligation with respect to migrant domestic workers, in particular, females.

CMW regularly advises states to ensure that they develop effective pre-departure and awareness-raising programmes for female workers who have made the decision to migrate, with briefings on their rights under the relevant human rights treaties in force, including CMW, as well as the conditions of their admission and employment and their rights and obligations under the law and practice of the receiving states.

Among other measures, CMW encourage countries of origin to enter into agreements with states of destination for the establishment of standard, unified and binding employment contracts with fair, full and clear conditions and labour standards that are enforceable by systems of law in countries of origin and employment; and to ensure that consular offices are trained to assist female migrant workers, and to provide counselling and guidance for submitting complaints; and encourage states to regulate and monitor recruitment agencies to ensure that they respect the human and labour rights of women migrant workers.

CMW also advises states to repeal sex-specific bans and discriminatory restrictions on women’s migration on the basis of age, marital status, pregnancy or maternity status, including restrictions that require women to get permission from their spouse or male guardian to obtain a passport or to travel or bans on women migrant workers.

The issue of detention of female migrant workers is yet another punitive measure that is often abused by authorities in many countries. The convention attempts to make migration for work as a positive and empowering experience for individuals and their societies, contributing to economic progress and human development both at home and in destination countries.

Today’s dramatic migration crisis underscores the urgent need to begin a more honest discussion about the obstacles to ratification of the Migrant Workers Convention. The convention at present has only 50 state parties, and most are states of origin of migrant workers, and destination countries by not ratifying the convention are conspicuously avoiding the human rights standards of the convention.

A clear vision of the need for migrant labour in destination countries, with more channels for regular migration, as well as for family reunification, would assist greatly in preventing the exploitation and other dangers faced by female migrant workers and to enable them to live a life in dignity.

This article was originally published on IPS.