By: Abdul Hakim)*
The Job Creation Law (UU Ciptaker) is believed to be able to increase Indonesia’s economic competitiveness. The regulation is expected to improve regulatory uncertainty needed to attract investment and support economic growth.
The general chairman of the Indonesian Food and Beverage Entrepreneurs Association (GAPMMI) assessed that, although this regulation reaped a lot of controversy, this regulation should have a global impact. One aspect that provides fresh air for entrepreneurs is the ease of investment, business and halal certification.
In addition, entrepreneurs will also get guaranteed legal protection by implementing an ultimatum remedium related to sanctions. The Job Creation Law is also considered to be able to facilitate business licensing from initially permit-based to risk-based and business scale. This provision is regulated in Article 7 CHAPTER III.
The level of risk is the potential for a hazard to health to the environment. For low-risk businesses, a business license is only enough with a Business Identification Number (NIB). Medium risk business licenses are added with the fulfillment of standard certificates. Meanwhile, those with high risk require approval from the central government to start a business.
The next article also mentions the abolition of location permits in accordance with spatial planning. Then the integration of environmental approvals in business permits. Environmental Impact Analysis (AMDAL) is only for high-risk business activities to the environment.
The Job Creation Law also removes the investment requirements contained in the Sector Law and transfers it to the Presidential Regulation on the Investment Priority List. So far, the convoluted and complicated problems of business licensing and bureaucracy in Indonesia have often prevented investors from investing or expanding in Indonesia.
Chairman of KADIN Andik Dwi Putranto said that the Omnibus Law can give hope to entrepreneurs who are experiencing difficulties in investment licensing. The Job Creation Law is also considered to be able to help Indonesia escape the abyss of an economic recession. The reason is, the Job Creation Law will attract a lot of investment into the country.
It should be noted that Indonesia’s ease of doing business ranking in 2020 tends to be stagnant compared to the previous year, which was 73rd out of 190 countries. This figure is still far from President Jokowi’s target of setting the ease of doing business at 40.
In the report written by the World Bank, Indonesia is still lagging behind Singapore, Malaysia, Thailand, Ukraine, Armenia and Vietnam. Meanwhile, in terms of competitiveness, Indonesia is also still far behind Singapore. Based on IMD World Competitiveness Ranking 2020 data, Indonesia’s competitiveness has dropped from 32 to 40 on the list.
The countries with the highest competitiveness rankings based on the data are Singapore, Denmark, Switzerland and the Netherlands. The four competitiveness assessment indicators are based on economic performance, government efficiency, business efficiency and infrastructure. Therefore, the Job Creation Law is one of the engines for the government to increase economic competitiveness, especially at the Southeast Asian level. The ease of licensing for business and investment has been highlighted by the government.
The Copyright Act is also believed to be able to answer various fundamental economic problems, especially after the Covid-19 pandemic. With the collaboration between the government, the business world and trade or labor unions, the problem of lack of job opportunities is expected to be resolved gradually.
Through the Ciptaker Law, issues related to employment are no longer a polemic, qualified workers must have qualified welfare standards. The job creation law is the main capital for economic recovery next year. This regulation is believed to be able to streamline hyperregulation which has long been an obstacle to investment growth in Indonesia.
The easier it is to obtain business permits, it is hoped that the investment climate in Indonesia will improve. Both for local investors and foreign investors who are interested in investing in the country. So this will have an impact on opening up job opportunities and decreasing unemployment.
Of course, Indonesia’s economic competitiveness can be improved if the Job Creation Law is properly implemented. On the other hand, the ease of business licensing stated in the Job Creation Law will also be a magnet for investors to invest in Indonesia.
)* The author is a contributor to Pertiwi Institute