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Omnibus Law Opens New Investment Climate and Job Opportunities

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By : Ashwin Sabil )*

The government passed the Employment Creation Law (Omnibus Law), Law no. 11 of 2020, as a strategy to reform various regulations in the economic field, especially business creation. This simplification of regulations will directly improve the investment climate, both from within and outside the country. The practice of Omnibus Law in Indonesia makes the business world more enthusiastic and creates a stimulus to create a more conducive business climate. In addition, the ease of investing in Indonesia will indirectly create new jobs that will absorb the needs of local workers. Moreover, Indonesia will experience a demographic bonus with an average working age population in the coming years.

The convenience that is often highlighted by the Omnibus Law is the ease with which it is easy to apply for a business license. The business management process which is known to be complicated and time-consuming has been adjusted to be shorter and simpler, so that the complexity of applying for a business license can be cut down effectively and efficiently.

The Omnibus Law has a positive impact on efforts to protect the welfare of MSME business owners (Micro, Small and Medium Enterprises), because it is able to simplify the licensing process, payment of business taxes, and regulations regarding employee salary payments. The Omnibus Law also helps MSMEs in managing sales results, investment, number of workers, and also fulfilling net worth indicators. Another guarantee from the Omnibus Law is the encouragement of MSME collaboration with large companies to the ease of obtaining the required certification.

Based on a global survey from the International Finance Corporation (IFC), Indonesia’s Easy of Doing Business (EoDB) Index in 2019 was ranked 73rd in the world. At the ASEAN level, Indonesia is ranked 6th out of 10 countries. The target of the Government of Indonesia with the Omnibus Law is that Indonesia can reach rank 40 which is indirectly also expected to be able to increase GDP and national economic competitiveness.

The ease of doing business created by the implementation of the Omnibus Law in Indonesia will encourage foreign investors to come to Indonesia, especially with the licensing process that is getting easier and without illegal fees. Likewise, domestic entrepreneurs will certainly be more motivated to compete in the business world and stimulate the growth and development of new businesses in Indonesia.

Investors who invest in priority sectors will get fiscal and non-fiscal incentives. From the fiscal side, incentives can be in the form of investment allowances, super deductions, or import duty exemptions. Meanwhile, from the non-fiscal side, it is in the form of ease of business or business licensing, ease of licensing for the implementation of business activities, provision of business support infrastructure, and guarantees for the availability of fuel or energy and raw raw materials.

The government through the Omnibus Law also provides guarantees of legal certainty and consistency of policies or regulations between the central, provincial and district or city governments. The number of regulations issued at the central and regional levels is an obstacle to business activities and job creation. Therefore, the Omnibus Law plays a role in simplifying, synchronizing and cutting regulations so that investors will still feel safe in investing in Indonesia.

President Joko Widodo stated that the government’s commitment to the agenda of structural reform, deregulation, and debureaucratization will continue to be carried out. Legal certainty and government support to create investment facilitation will continue to be guarded. The government can guarantee an increase in a safe investment climate because the attractiveness of investment in Indonesia is still very high. The advantages that attract investors’ attention to Indonesia include a large market, a large workforce, and relatively affordable and readily available raw materials.

In addition to strengthening the investment climate in Indonesia, the Omnibus Law was basically drafted with the aim of prospering and helping job seekers in Indonesia. Under the Omnibus Law, the Government will add labor-intensive jobs in various fields, namely the textile industry, snacks, beauty products, and the like.

Indonesia has a vision to become the top 5 countries with the strongest economy in the world, and have a GDP of IDR 27 million per capita per month by 2045. The Omnibus Law can create a conducive investment climate so that it will absorb more workers, reduce unemployment, increase economic growth, and worker productivity. One of the strategic policies of the Omnibus Law is the improvement of the investment ecosystem and business activities, protection and welfare of workers, convenience, empowerment, and protection of MSMEs.

Not only creating the widest possible employment opportunities, the Omnibus Law can also improve the quality of protection for workers or laborers. In order to maximize the absorption of local workers, efforts to improve the quality of human resources are needed to limit the maximum number of foreign workers (TKA) working in Indonesia. In addition, the Omnibus Law also provides more partiality to workers by providing better job security, income and social fields.

The most important thing in the Omnibus Law is that it aims to focus on an equitable absorption of Indonesian citizens. This means that it is not biased towards big cities only. It is estimated that the Omnibus Law will open around 46 million new job vacancies. The Government of Indonesia will ensure optimistic steps to restore economic conditions in Indonesia and improve the welfare of the Indonesian people.

)* The author is a contributor to Semarak News

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