February 25, 2026
JAKARTA – When most Indonesians hear the term “modern slavery,” they think of perbudakan in its historical sense, people in chains, legally owned by others, with no freedom at all.
In reality, modern slavery goes far beyond this. It is about an absence of choice: situations where workers lack the real freedom to stop working because of threats, coercion, deception or debt.
In recent years, its scope has been increasingly expanded to include abusive labor practices and the worst forms of child labor.
The growing importance of the issue was highlighted recently by a widely reported case involving technology company Dyson in the United Kingdom where, following allegations by Nepali and Bangladeshi migrant workers of forced labor and abusive labor practices at a Malaysian supplier, the UK courts allowed the workers to bring civil damages claims directly against Dyson Group in the UK.
As more countries adopt laws to combat modern slavery, Indonesian companies face growing scrutiny.
Labor practices that might once have passed as “business as usual” can now trigger legal and reputational consequences abroad, including lost contracts, blocked exports, market exclusion and even civil or criminal liability.
The UK was an early mover with its Modern Slavery Act of 2015. The law requires large companies that do business in the UK, including foreign companies, to publish an annual statement explaining how they address modern slavery risks in their operations and supply chains. A company does not need to be based in the UK to be caught by the law.
For Indonesian businesses, this creates two main risks. Companies operating in the UK may be required to report publicly on their labor practices, while those supplying UK customers can expect far closer scrutiny of working conditions at Indonesian sites.
Although the act does not impose automatic fines, failures can lead to public naming, court orders, lost contracts and serious reputational damage.
And as the Dyson case illustrates, alleged abuses at overseas suppliers may also lead to civil damages claims in the UK.
Under the European Union’s Corporate Sustainability Due Diligence Directive (2024), very large EU and non-EU multinational companies that satisfy certain thresholds are required to actively identify and address human-rights risks across their “chain of activities,” including foreign subsidiaries and suppliers.
Failure to do so can lead to investigations and financial penalties imposed by national regulators.
The directive also provides a basis for civil claims in national courts where a company’s failure to carry out due diligence causes harm, allowing affected individuals and NGOs to seek compensation, a move that opens Indonesian operations to direct legal exposure in European courts.
The impact of the directive extends far beyond Europe. Companies that are caught by it are legally required to scrutinize labor practices throughout their global supply chains, including in Indonesia. As a result, Indonesian suppliers may be asked to open their operations to audits, provide detailed labor data or change employment practices.
The United States has taken a different but highly effective approach through trade enforcement. Goods suspected of being linked to forced labor can be detained or seized at the US border before they ever reach the market. The burden then shifts to the importer to prove that no forced labor was involved at any stage of production.
For Indonesian exporters, this means that a single problematic component or supplier could result in delayed shipments, canceled contracts and sudden exclusion from the US market.
While modern-slavery risks in labor-intensive sectors have been widely documented globally, one area that is often overlooked is the impact of extreme price competition, particularly in outsourcing and subcontracting.
When labor is priced at levels that cannot realistically support legal wages, insurance and statutory protections, the pressure is inevitably pushed onto workers.
In these conditions, workers may be kept on perpetual “temporary” contracts, discouraged from asserting their rights or made economically dependent on intermediaries for continued work.
International auditors increasingly view such practices as warning signs of forced or coercive labor.
Indonesia is strengthening its human rights and manpower safeguards through both executive and legislative initiatives.
The government has approved the drafting of a new presidential regulation on business and human rights that, once finalized, is expected to set out more detailed expectations for businesses to respect and protect human rights, including through due diligence processes.
This development, which aims to be completed in 2026, builds on the existing National Strategy on Business and Human Rights and reflects broad engagement with ministries, industry and civil society.
Separately, discussions are underway in the House of Representatives about revising the current Human Rights Law to modernize its framework and potentially include corporate human rights compliance.
While neither measure has yet been enacted as binding law, these initiatives signal a shift toward making human rights due diligence a domestic priority, aligning Indonesian policy more closely with evolving international standards.
Even the appearance of forced labor or the erosion of basic worker protections can now carry serious commercial consequences. Modern slavery is no longer limited to trafficking or extreme abuse; it can also arise from child labor, debt-based recruitment, punitive treatment of workers or work arrangements that leave people with no real choice.
For both foreign companies with suppliers or operations in Indonesia and Indonesian companies with global ambitions, managing these risks requires more than formal policies. Companies are increasingly expected to set clear labor standards, apply them across suppliers and subsidiaries, and actively check that they are followed.
In today’s regulatory environment, “not knowing” what happens in the supply chain is no longer an acceptable excuse.
Yohanes Jeffry Johary is CEO of PT OCS Indonesia. James Boyd, is a dual-qualified solicitor (England and Wales) and Indonesian advocate at Dentons HPRP law firm.