The global economy is currently filled with inequality due to slowing global growth, the threat of climate change, escalating geopolitical tensions, and public policies that lack influence. The government has pushed for the passage of the Job Creation Law in the hope of stimulating economic growth through increased investment. As a legislative instrument, the Job Creation Law aims to create a more conducive business environment for investors, both local and foreign.
It is proven that the implementation of the Job Creation Law has had a positive impact on the Indonesian economy. In the last five quarters, investment growth in Indonesia has reached an average of 29.4 percent.
Coordinating Minister for the Economy, Airlangga Hartarto, conveyed Indonesia’s position in efforts to encourage the strengthening of a dynamic labor market. He mentioned the success of the Job Creation Law which was effective in reducing barriers to domestic and foreign investment. It was recorded that the average increase in PMA reached 29.4 percent in the five quarters after the implementation of the law.
He further explained that Indonesia is preparing various comprehensive anticipatory steps to invest in training and education, for example education at an early age, vocations, as well as preparation and training for job seekers.
Airlangga Hartarto also emphasized the importance of MSMEs as part of efforts to create jobs in Indonesia, while also expressing the success of the Job Creation Law which is effective in reducing barriers to domestic and foreign investment. Touching on MSMEs, Coordinating Minister Airlangga also mentioned that implementing public policies by providing inclusive financing incentives, technical assistance, and equalizing digital infrastructure was one of the government’s priority efforts, including in realizing a Golden Indonesia 2045. Apart from that, Airlangga also emphasized the importance of digitalization in answering labor market problems for today’s young generation.
The Task Force for the Acceleration of Socialization of the Job Creation Law (Job Creation Law Task Force) revealed that there was an increase in investment trends following the publication of the Job Creation Law. In 2023, Indonesia will exceed the investment target by reaching IDR 1,418 trillion.
Chair of the Substance Synergy Working Group for Socialization of the Job Creation Law Task Force, Tina Talisa, is optimistic that Indonesia will be able to achieve the 2024 investment target, which has increased to IDR 1.6 trillion. He informed that before the Job Creation Law, the issuance of NIB per day only reached five thousand, now in 2023-2024 the issuance of NIB will reach eleven thousand per day and this needs to be appreciated.
According to him, achieving this level of investment is a successful collaboration between the regional government and business actors, both micro, small, medium and large businesses, through investment in Indonesia.
Apart from that, this is also driven by government policies that make it easier to issue permits. As for the system used, risk-based OSS (Online Single Submission) is a form of integration of all permits.
One of the main points in the Job Creation Law is an effort to simplify business regulations and procedures. By unifying various regulations relating to investment, this law is expected to reduce bureaucratic red tape and increase clarity and legal certainty for investors. Simpler and more transparent procedures will help attract investors to invest their capital in Indonesia.
Legal certainty is a crucial factor that investors consider before they decide to invest their capital. By simplifying business regulations and procedures, the Job Creation Law aims to create a more stable and reliable legal environment for investors. It is hoped that with clarity regarding policies, investors will be more confident in making long-term investments in Indonesia.
Professor Nindyo Pramono, Professor of Business Law, Gadjah Mada University (UGM), said that investors responded positively to structural reform efforts implemented through the Job Creation Law. Furthermore, Nindyo explained that structural reforms through the Job Creation Law had also succeeded in reducing trade and investment barriers in Indonesia.
The implementation of this law can have a positive impact in increasing investment in Indonesia. By simplifying regulations, increasing legal certainty and increasing global competitiveness, it is hoped that the Job Creation Law can become an important instrument in encouraging sustainable and inclusive economic growth in Indonesia.
However, the success of this law cannot be separated from its effective and transparent implementation, as well as the commitment of the central and regional governments to maintain a balance between the interests of investors and the interests of society as a whole.
One of the main focuses of the Job Creation Law is regulatory reform to increase the ease of doing business. Along with the complexity of existing regulations, complicated licensing and bureaucratic processes often become major obstacles for investors. By simplifying licensing procedures and eliminating obstructive regulations, the Job Creation Law aims to create a friendlier and more efficient business environment for investors. It is hoped that this ease of doing business will attract the interest of investors both from within and outside the country to invest their capital in Indonesia.
In the midst of increasingly fierce global competition, Indonesia needs to strive to increase its competitiveness as an investment destination. Through the regulatory reforms brought about by the Job Creation Law, it is hoped that Indonesia can become more attractive to investors compared to its competing countries. Simplifying the investment process, reducing operational costs, and increasing legal certainty can help Indonesia compete more effectively in the global market.