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The Job Creation Act has a Significant Impact on Business and Investment


Law Number 11 of 2020 concerning Job Creation is the Government’s breakthrough to simplify regulations. The regulation is believed to have a significant impact on the business and investment world.

The Job Creation Act (UU Ciptaker) has the aim of reviving the business and investment world. This law is able to simplify the regulation massively from 79 laws into one law. The main goal is to create a quality business and investment climate for business people, including MSMEs and investors. President Jokowi also revealed the impact of the existence of the Act.

First, the licensing process for business and investment will be simpler and faster. Micro business licensing is no longer needed, just registration is enough.

Second, the Job Creation Law is able to cut illegal levies and corruption by integrating the entire licensing process into the electronic licensing system through the Online Single Submission (OSS).

Third, business activities and investing are getting easier. The formation of a limited liability company is made simpler and there is no longer any minimum capital limitation. Processing of patents, trademarks is also accelerated. Procurement of land and land for public interest and investment is much easier.

Fourth, investing in Special Economic Zones (SEZs), free trade areas and free ports will be made easier and more attractive with various facilities and incentives.

Fifth, Indonesia has also established a sovereign wealth fund institution that will manage and place a number of state funds and or assets directly or indirectly, as well as cooperate with third parties.

On the other hand, the government also provides various attractive facilities and incentives for those who invest in SEZs, Free Trade Areas and Free Ports. The President conveyed Indonesia’s commitment to provide licensing services within hours to facilitate investment in these areas.

On a different occasion, Febrio Nathan Kacaribu as Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance ensured that the enactment of the Job Creation Law would help increase Indonesia’s competitiveness in the international arena. This is because the law is able to realize structural reforms that can significantly affect the quality of human resources.

He said the job creation law was very influential on comprehensive structural reforms starting from the lowest education sector in the country. Because, in this law every education budget in the APBN will be directed to improve the quality of education outcomes.

With the increase in the quality of domestic human resources, of course, both foreign and domestic investors will be more interested in investing in Indonesia, considering this very important factor for a rapid transformation in the next few months.

We need to know that the Job Creation Law also aims to encourage the business climate, accelerate economic transformation, harmonize central-regional policies, provide ease of doing business, overcome overlapping regulatory problems, and eliminate sectoral egos.

The President of the Republic of Indonesia, Joko Widodo, said that he would guarantee investment security for foreign investors. They can prove it for themselves, by looking at the achievement of investment in Indonesia, which is 9% per year in 2021. Thus, investors will believe that investment in this country is very profitable.

In addition, the improvement of the Job Creation Law also supports the provision of full salaries and bonuses and allowances for local workers. If workers are forced to be laid off, according to the Job Creation Act, workers will receive severance pay of 25 times their salary.

For Micro, Small and Medium Enterprises (MSMEs), the benefits obtained from the Job Creation Act are in the form of support in the form of convenience and certainty in the licensing process through OSS.

With the existence of the Job Creation Law, the establishment of a PT does not require a notarial deed of company establishment, but only requires company statements which are made electronically and ratified by the Ministry of Law and Human Rights. This of course can encourage legal certainty for MSME actors. This of course can stimulate the spirit of entrepreneurship for the community. because of the practicality of the licensing process.

The Job Creation Law provides hope for business actors, both MSMEs and investors, with regulations that are able to cut the licensing process, it is not impossible that the business world and investment in Indonesia will experience a significant increase.

) *The author is a contributor to Pertiwi Institute

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