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The Job Creation Law has the Potential to Boost Investment in the Tourism Sector

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The tourism sector has an important role as a source of foreign exchange earnings, and can encourage national economic growth, especially in reducing the number of unemployed and increasing the productivity of a country. The tourism sector is also one of the strategic sectors that must be utilized to support the national development agenda, which can increase people’s income and welfare, so as to encourage economic growth.

Based on data from the Central Statistics Agency (BPS) in 2021 the tourism sector contributed 4.2% to GDP, but the export value of creative and creative products reached USD 20.58 billion and the added value of creative and creative products reached IDR 1,273 trillion. With the increase in export value and economic value, the contribution of the tourism sector to GDP in 2022 will reach 4.3%. Along with the increasing performance of the tourism sector, by 2022 the added value of the creative economy is targeted to reach IDR 1,236 trillion, while the export value of creative products is targeted to reach USD 21.28 billion. In addition, by 2022, it is targeted to expand the number of jobs to 400,000 businesses in the tourism sector.

However, the Covid-19 pandemic has increased health risks, thus disrupting the performance of the tourism sector in Indonesia. Based on BPS data, the total number of foreign tourist arrivals (tourists) in 2021 reached 1,557.5%, a decrease of 61.7% compared to 2020 which was recorded at 4,052.9 people. This decline in foreign tourist arrivals has a negative impact on the national tourism sector, this can be seen from the weakening of foreign exchange earnings from tourism and the disruption of the employment sector in the tourism sector. Until August 2021, it was recorded that around 12.91 million people in the tourism sector experienced a reduction in working hours, and 939 thousand people in the tourism sector were temporarily out of work.

To reactivate the tourism sector by encouraging investment and creating new business fields, so as to increase employment, especially in the tourism sector, the Government of Indonesia under the leadership of President Joko Widodo has issued Law Number 11 of 2020 concerning Job Creation on 2 November 2020 The regulation aims to create jobs and increase foreign and domestic investment by reducing regulatory requirements for business permits and land acquisition.

Tourism Industry Observer, Muslim Jayadi said, there are a number of benefits from Law Number 11 of 2020 concerning Job Creation for the tourism industry. With this regulation, tourism business actors get easy licensing through online and digital systems. In addition, tourism business actors can participate in developing partnerships with Micro, Small and Medium Enterprises (MSMEs) and local cooperatives. This is in accordance with Article 26 paragraph (1) point (f) of the Job Creation Law which states that every tourism entrepreneur is required to prioritize local community products, domestic products, and provide and provide opportunities for local workers. Meanwhile, Secretary General of the Indonesian Hotel and Restaurant Association (PHRI) Maulana Yusran assessed that regulations related to the Job Creation Law could have a positive impact on the national tourism sector, because they could shorten business licenses. The business licensing process will increase investment that can develop national tourism destinations. This condition will certainly increase the attractiveness of Indonesian tourism in the eyes of foreign tourists.

The Covid-19 pandemic has increased health risks, thereby hampering community economic activity, especially the tourism sector. The weakening of the performance of the tourism sector in the midst of the Covid-19 pandemic could weaken foreign exchange earnings from tourism and increase the unemployment rate, thereby weakening people’s income. The existence of the Employment Creation Law regulation is a good momentum to increase investment again and encourage the creation of new business fields, which can increase labor absorption and community welfare.

By: Wahyu Pratama )* The author is a Public Policy Observer

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