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The Job Creation Law Can Improve Indonesia’s Economic Prospects


By: Agung Suwandaru)*
The government has committed to comply with the decision of the Constitutional Court to revise the Job Creation Law. It is hoped that this regulatory improvement will provide legal certainty for investors in order to improve Indonesia’s economic prospects. One of the improvement steps in the revision of Law Number 12 of 2011 is to regulate the omnibus law method as a standard legal basis.
Coordinating Minister for Economic Affairs Airlangga Hartarto said investors and various countries were waiting for structural reforms that Indonesia was currently undertaking. With the existing improvement process, his party believes that the revision of the Job Creation Law can be carried out faster than the grace period given by the Constitutional Court (MK).

The government also continues to strive to increase public participation to fulfill the right to be heard, the right to have their opinions considered and the right to get an explanation.
Airlangga hopes that the improvement of the Job Creation Law can avoid future uncertainties due to a number of rejections and lawsuits to the Constitutional Court. He also asked business actors not to worry about business certainty. This is because the certainty of investment activities has been covered by the legal umbrella of Law Number 25 of 2007 concerning Investment. Various bilateral trade and investment agreements will also become business certainty for foreign investors.
The Job Creation Law is also considered capable of improving economic prospects in Indonesia, with the existence of the Job Creation Act, it is expected to provide convenience in managing business permits. Thus, there are not too many regulations so that they can be synchronized both at the central and regional levels.

The improvement in economic prospects in Indonesia is certainly not without reason, considering that the Job Creation Law has a formula to simplify business licensing, employment investment requirements, convenience and protection for MSMEs, research and innovation support, government administration, imposition of sanctions, land acquisition, investment and government projects and economic area.
The Job Creation Law is also considered to be able to facilitate business licensing from initially permit-based to risk-based and business scale. 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, business licensing issues are known to be complicated and complicated. In addition, the bureaucracy in Indonesia often prevents investors from investing or expanding in Indonesia. The Job Creation Law is one of the engines for the government to improve economic competitiveness, especially at the Southeast Asian level. The ease of licensing for business and investment has been highlighted by the government.

With the ease of obtaining business permits, it is hoped that the investment climate in Indonesia will improve. Both for local 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.
We also need to know that the main purpose of the Job Creation Law is 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.

President Joko Widodo once said that investment growth would be much higher through several structural reforms that the government carried out. The main investment destination for foreign investors who invite them to ripen economic opportunities. With good investment opportunities, the economy can grow and be maintained for the community.
As the number of Covid-19 cases in Indonesia decreases, of course this is a good moment for Indonesia to revive the economic sector, so that Indonesia is advanced with economic strength that cannot be underestimated by other countries.

)* The author is a contributor to Pertiwi Institute

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