Christians in the country are opposing the proposal, called the 'Islamic boarding schools (Pensantren) and religious education' or RUU bill.
It was proposed by the United Development Party (PPP) - an umbrella party of Muslim groups - in 2013.
If it passes, every Sunday school will be required to have at least 15 people and the organiser must have the approval of the Religious Affairs Ministry.
More than 200,000 Christians have signed an online petition to Indonesian President Jokowi and the House of Representative in protest of the bill.
Their concern follows the 'Joint Ministers Decree' that regulates church membership which has been used by Islamic extremist groups and the government to stop Christians from building churches.
The general Secretary of the Indonesian Communion Church (PGI), Gomar Gultom, argued that Sunday schools are informal and part of the church's worship activity, not the same as other religious education.
They also pointed out that Sunday school should not require permission as religious freedom is already guaranteed in the Indonesian Constitution (Article 29).
The House of Representatives has promised to hold hearings to ensure that religious freedom is upheld.
The main component Christians are opposing is article 69 of the bill, which reads:
"(1) Non-formal Christian Religious Education as stated in Article 56 is held in the form of Sunday School, Bible School, Church Youths, Catechism, or any other similar activities.
(2) The non-formal Christian Education as stated in the first clause are ones held by Churches, Christian mass-organizations, and Christian religious institutions in the form of a formal education or program.
(3) Non-formal Christian Religious Education in clause (1) is held in a program that has at least 15 attendees.
(4) Non-formal Christian religious education held in the form of a formal education or compulsory formal education must bear a permit from the city's or district's Religious Affairs Office".
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