Australia: A Modern Slavery Act and its potential impacts on Australia–Indonesia business

Last Updated: 25 September 2017
Article by Abigail McGregor

The bilateral trade and investment relationship between Australia and Indonesia is well established. In 2015–16, two-way trade in goods and services was valued at AU$15 billion and two-way investment was valued at AU$9.8 billion. Businesses in Australia investing in Indonesia and Indonesian companies partnering with, or supplying Australian businesses need to be aware of both nations' increased focus on tackling modern slavery.

An Australian Modern Slavery Act

The Australian Government has announced an intention to enact a Modern Slavery Act. The proposed regime will make it a requirement for large corporations and other entities operating in Australia with a turnover of AU$100 million to report annually on their actions to ensure transparency in their operations and supply chains and the steps they are taking against modern slavery. Statements will need to be approved at board level and signed by a company director. Businesses with revenue below the reporting threshold will have the option to submit annual statements. It is currently proposed that the statements will need to cover:

  1. the entity's structure, its operations and its supply chains;
  2. the modern slavery risks present in the entity's operations and supply chains (for parent companies this requires a global review of risk);
  3. the entity's policies and process to address modern slavery in its operations and supply chains and their effectiveness; and
  4. the entity's due diligence processes relating to modern slavery in its operations and supply chains and their effectiveness.

The annual statements will be held in a central repository which will improve transparency and increased public scrutiny for non-government organisations, interest groups and consumers to review, compare and consider the steps being taken by reporting entities. By publishing the statements, companies will be able to convey their commitment to addressing modern slavery in their operations and supply chains to their consumers who are increasingly more critical in evaluating the origins of the goods and services they purchase.

Indonesia's efforts to combat modern slavery

Indonesia has taken a lead role in Asia in its endeavours to address modern slavery. For example, Indonesia recently launched a National Action Plan on Business and Human Rights, the first country in Asia to do so.

Last year, the Indonesian government developed a human rights certification process in the fisheries industry which is likely to be replicated for the construction and agricultural sectors. In addition to government-led initiatives, at the recent Bali Process Government and Business Forum held in August 2017, Indonesian business leaders committed to adopt the Indo-Pacific Modern Slavery Acts in a collective effort to end modern slavery in the region. It is envisaged that the Indo-Pacific Modern Slavery Acts will include mandatory reporting requirements of companies in relation to their supply chains. The Indonesian Government's response to the business leaders' proposal of the Indo-Pacific Modern Slavery Acts is likely to be monitored closely by companies operating in Indonesia and by human rights groups.

The extent of the problem

Approximately 45.8 million people globally who are subjected to some form of modern slavery generate around US$150 billion per year in the global private economy from their forced labour alone. Asia Pacific has the highest number of slaves in the world. As at 2016, it was estimated that 0.29 per cent of Indonesia's population were enslaved. The size of the Indonesian population means that Indonesia is in the top 10 nations for slavery in the Global Slavery Index.

What industries in Indonesia are reported as highest risk?

The following industries in Indonesia have been reported as having high risk for slavery:
  • fishing
  • shipping
  • agriculture including palm oil and tobacco
  • tin
  • construction
  • domestic services

Given the diversity and volume of natural resources and manufactured products exported by Indonesia, many Australian companies have materials sourced from Indonesia in their supply chains. In addition, there are over 470 registered Australian businesses operating in Indonesia.

It is widely recognised that slavery is not confined to developing countries. Developed countries around the world also have cases of slavery, be it from labour and wage exploitation, debt bondage or human trafficking, to name a few examples. It is envisaged that the introduction of the Modern Slavery Act will ensure Australia's response to modern slavery is as effective as possible and contribute to global efforts to eradicate slavery.

These developments in Australian and Indonesia are part of a global wave to address modern slavery. By way of example:

  • companies that carry on business in the UK with total annual turnover exceeding £36 million are required to publish annual statements, signed off by senior management, reporting on the steps they have taken to eradicate slavery and human trafficking in their operations and supply chains over the previous year;
  • in California, companies with global revenues greater than US$100 million per annum are required to disclose information about their efforts to remove slavery and human trafficking from their tangible goods supply chains;
  • France recently passed legislation requiring certain companies to undertake due diligence to identify and respond to human rights abuses;
  • the Dutch Parliament recently adopted a law (currently awaiting approval by the Senate) requiring companies to determine whether child labour exists in their supply chains and prepare a plan of action to combat it.

Much of the momentum towards tackling modern slavery has been driven by business and government working together. We expect that in the short term further jurisdictions will enact due diligence or transparency obligations, with the support of their local business communities.

What can business do now to prepare?

Having regard to the heightened exposure on the issue of modern slavery and the introduction of legislation on the horizon, many businesses in Australia and around the world are embracing the pursuit of an end to modern slavery by evaluating their domestic and international supply chains and seeking ways to implement corrective actions if needed.

Indonesian businesses ought be prepared for questions from Australian customers, business partners and governments regarding the steps that they have taken to ensure modern slavery does not occur in their operations. The decision in Australia follows a global trend of seeking to address modern slavery. Many Indonesian companies will already have experienced similar requests from entities engaging in businesses in the UK.

Multinational companies, including those from Australia, operating in Indonesia need to follow carefully developments in Indo-Pacific Modern Slavery Acts. They also need to critically assess the risk of modern slavery in their operations and supply chains within Indonesia. Businesses required to prepare Modern Slavery Statements in Australia will no longer be able to turn a blind eye to these issues and will need to undertake a thorough risk assessment having regard to sector, jurisdictional and entity specific risks.

Companies can start preparing now by (at least) considering the following steps:

  1. Mapping the organisation's structure, businesses and supply chains;
  2. Formulating policies in relation to modern slavery – this will involve collating current policies, identifying gaps, adapting existing policies and formulating new policies, as needed;
  3. Carrying out a risk assessment – identifying those parts of the business operations and supply chains where there is a risk of modern slavery taking place;
  4. Assessing and managing identified risks – this may include carrying out further due diligence in the entity's operations and supply chains and reviewing and adapting contract terms and codes of conduct with suppliers;
  5. Considering and establishing processes and KPIs to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains;
  6. Carrying out remedial steps where modern slavery is identified;
  7. Developing training for staff on modern slavery risks and impacts.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Abigail McGregor
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions