Derivative Regulations on Job Creation Law Make Investment in KEK easier

By: Prima Nerito ) *

The government seems to want to attract more investors by building many special economic zones (KEK). For this reason, the government issued government regulation (PP) 40/2021 concerning the Management of Special Economic Zones which is a derivative of Law 11/2020 concerning Job Creation.

The derivative regulations of the Job Creation Law accommodate many conveniences. One poi n p e n t i n g y a k n i m e n g e n a i l a h a n KEK . In the regulation promulgated on February 2, 2021, the government requires that the area proposed to be a KEK must have controlled at least 50% of the total land development plan of the project. The rules will take effect within 60 days of their promulgation.

              Coordinating Minister for the Economy Airlangga Hartarto said the changes that occurred through this derivative regulation of the Job Creation Law could trigger the speed of investment in Indonesia.

              Airlangga said that changes in the licensing process and expansion of the business sector for investment are believed to be a game changer in accelerating investment and opening up new jobs.

              Furthermore, through the derivative regulations that have been made, the government has changed the concept of investment coverage from being based on the Negative Investment List (DNI) Business Sector to the Priority Business Sector. The various priority areas of business will be given incentives and facilities, including fiscal and non-fiscal incentives.

              The fiscal incentives provided are divided into two, the first is tax incentives, including income tax for capital investment in certain business fields and / or in certain areas ( tax allowance reduction of corporate income tax tax holiday ).

              The government also regulates the matter of reducing corporate income tax and facilities for reducing net income for investment, as well as reducing gross income for certain activities.

              Meanwhile, until the end of 2020 investment realization in KEK had reached Rp 23.1 trillion.

              Secretary of the Ministry of Economic Coordinating Susiwijiono Moegiarso men gatakan, SEZ development has resulted in investment commitments amounting to Rp 70.4 trillion and has been realized by Rp 23.1 trillion by the end of 2020.

              Susiwijono said that the biggest investment realization came from the Galang Batang KEK in the Riau Islands Province (Kepri) which was officially operational at the end of 2018.

              This was followed by the Sei Mangkei SEZ in North Sumatra Province and the Kendal SEZ in Central Java Province which had just been designated as a KEK at the end of 2019.

              From the development of this KEK, employment opportunities have been created for 19,951 people by the end of 2020.

              In addition to attracting investment and creating jobs, several business actors in KEK have made production and contributed to foreign exchange through exploration to more than 30 countries valued at Rp 5.2 trillion last year.

              Until now, there have been 15 SEZs operating, with details of 6 tourism SEZs and 9 Industrial SEZs.

              On a different occasion, the Development Economic Expert of UIN Syarif Hidayatullah Jakarta Arisman said, Law (UU) no. 11/2020 concerning Job Creation has a positive impact on the development of Special Economic Zones (KEK). According to him, there are 2 main roles of the Ciptaker Law on the development of KEK.

              First is minimizing authority. This is because decentralization causes problems of authority, the emergence of petty kings in the regions, which slows down licensing. The second is the recentralization of licensing.

              Arisman also said that the Job Creation Law is more suitable to be called the Law on the ease of doing business. Because, according to him, job creation is only a multiplayer effect from the ease of doing business.

              According to him, the Indonesian Government has built and prepared 15 SEZs spread over several regions, where the distribution is quite even and the types of KEK are in accordance with the characteristics of each area.             

              The SEZ has a goal of accelerating economic development that can invite foreign investment. For this reason, accelerated business licensing, easier access to land and better labor regulations .

              Of course, besides being supported by good physical infrastructure, KEK must also be supported by regulatory and bureaucratic policies. The Job Creation Law has also been clarified by the existence of a derivative regulation from the Law.

              Economic development is of course an absolute thing to do, of course this requires regulations that can facilitate investment in Indonesia, so there is no news stating that managing investment in Indonesia is very convoluted.

) * The author is a contributor to the Cikini Press Circle and Students

#Derivative Regulations on Job Creation Law Make Investment in KEK easier\
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