Ease of Doing Business in the Era of President Jokowi: The Effectiveness of the Job Creation Law in Building the Economy
By: Rivka Mayangsari*)
Since President Joko Widodo led Indonesia, one of the government’s main focuses has been to create a more conducive and inclusive business climate. To that end, the Job Creation Law or often referred to as the Omnibus Law is present as an effort by the government to overhaul various regulations that hinder investment and business development, especially in the Micro, Small, and Medium Enterprises (MSMEs) sector. With the backdrop of the global crisis facing Indonesia, such as the Covid-19 pandemic, the government continues to innovate to encourage sustainable economic growth.
Micro, Small, and Medium Enterprises (MSMEs) have been the backbone of the Indonesian economy for decades. Their existence is very important, especially in times of crisis, as expressed by the Head of the Gorontalo Regional Office of Law and Human Rights, Pagar Butar Butar. He stated that MSMEs have proven to be a mainstay sector in maintaining the stability of the Indonesian economy, both when facing the monetary crisis in 1998 and the recent Covid-19 pandemic. According to him, MSMEs, which number around 64.2 million, have made a major contribution, namely contributing 61.07 percent of Indonesia’s Gross Domestic Product (GDP) and absorbing around 97 percent of the workforce.
The Job Creation Law has created several significant changes that support the development of MSMEs. One of the breakthroughs introduced is the establishment of a Sole Proprietorship, a new legal entity that allows entrepreneurs to establish a Limited Liability Company (PT) with just one person. This makes it easier for MSMEs who were previously constrained by administrative requirements and high costs to form a PT business entity. Pagar Butar Butar also added that the presence of this Sole Proprietorship allows business actors to establish a PT without minimum capital and at a lower cost.
This facility provides flexibility for MSMEs to transform from informal businesses to formal businesses, which of course provides many benefits, such as easier access to funding, business development, and stronger legal guarantees.
One important aspect emphasized in the Job Creation Law is the application of digital technology in the business licensing system. With the introduction of the Online Single Submission (OSS) system, the government has simplified the licensing process which was previously considered complicated and time-consuming. Now, entrepreneurs only need to access one platform to obtain various types of permits, from business establishment permits to environmental permits.
Head of the Investment and One-Stop Integrated Service Office (DPMPTSP) of Penajam Paser Utara (PPU) Regency, Nurlaila, explained that OSS was implemented in accordance with national policies stipulated in the Job Creation Law. She explained that the implementation of OSS and other electronic licensing systems, such as Sipesan, aims to accelerate the investment process and create a more conducive business climate in the regions. According to her, this policy is in line with the objectives of the Job Creation Law to support economic growth in the regions.
This digital transformation is certainly very beneficial, especially for MSMEs who were previously hampered by complicated bureaucracy. With the OSS system, entrepreneurs no longer need to spend time and energy to take care of various permits separately. All processes can now be done online, transparently, and integrated. This also has a positive impact on accelerating investment in various sectors, because faster licensing means businesses can operate immediately and make real economic contributions.
The effectiveness of the Job Creation Law in facilitating ease of doing business is not only felt by MSMEs, but also by large investors. With various simpler regulations, the government is trying to attract foreign investment to enter Indonesia. This is an important step in an effort to create new jobs, increase state revenues, and encourage national economic growth.
With bureaucratic reform and more flexible regulations, Indonesia becomes more competitive in the eyes of global investors. For example, the manufacturing and infrastructure sectors benefit from legal certainty and faster licensing. This gives investors more confidence to invest in Indonesia.
Not only that, government policies in supporting new and renewable energy through various regulations in the public service sector also play a role in creating more sustainable economic development. With the active role of the government in accelerating investment in this sector, Indonesia shows its commitment to low-carbon development.
In the era of President Jokowi’s administration, the Job Creation Law has brought a breath of fresh air to the business world in Indonesia. Through various simpler and more transparent regulations, the government is trying to create a conducive business climate for the growth of MSMEs and attract foreign investment. With the ease of licensing through the OSS system, business actors now have easier and faster access to establish and develop their businesses.
Thus, collaboration between the government, business actors, and the community is essential to ensure that the Job Creation Law can achieve its goal of building a stronger and more competitive Indonesian economy at the global level.
*) Economic observer
