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The Job Creation Law Resolves Investment Barriers


One of the obstacles to the development of investment is complicated licensing problems. The Job Creation Act is considered capable of solving the problem of impeding investment because it cuts down on overlapping regulations/regulations or permits.

The Job Creation Law is also considered to be a solution to improve the domestic investment climate for the better. Chairman of the Standing Committee on Employment of the Indonesian Chamber of Commerce and Industry, Bob Azam said, the Job Creation Law was able to boost the Indonesian economy even in the midst of the Covid-19 pandemic.

According to Azam, the Job Creation Law can be a breath of fresh air for investors who will come to Indonesia to invest. This is because the Job Creation Law is able to resolve three chronic problems related to employment, licensing and taxation which often become obstacles in promoting investment in the country.

Therefore, he hopes that the government can encourage all stakeholders related to the legislation to implement each item of the legislation.

Previously, the Capital Handling Coordinating Board (BKPM) believed that the Job Creation Act would solve a number of obstacles when investors wanted to start investing in Indonesia. Because the obstacles faced by investors when they want to invest are the many regulations and permits.

Deputy for Investment Cooperation at BKPM Riyatno said there were still several investment barriers, including settling civil disputes in court, then starting a business, registering property, licensing for building construction and also cross-border trade.

The government also regulates simplified investment requirements. For investment implementation, the guideline is the negative investment list (DNI), which will later be converted into the investment priority list (DPI). The DPI will regulate what investments will be encouraged in order to have a wider impact on job creation. Investment priorities that are encouraged include, among others, national strategic projects that are labor-intensive or capital-intensive, high-tech and export-oriented.

So far, the complexity of business licensing issues and bureaucracy in Indonesia have often prevented investors from investing or expanding in Indonesia. It should be noted that Indonesia’s ease of doing business ranking in 2020 tends to be stagnant compared to the previous year, which was 73rd out of 190 countries. This figure is still far from President Jokowi’s target of setting the ease of doing business at 40. In the report written by the World Bank, Indonesia is still lagging behind Singapore, Malaysia, Thailand, Ukraine, Armenia and Vietnam.

Meanwhile, in terms of competitiveness, Indonesia is also still far behind Singapore. Based on IMD World Competitiveness Ranking 2020 data, Indonesia’s competitiveness has dropped from 32 to 40 on the list.

The countries with the highest competitiveness rankings based on the data are occupied by Singapore, Denmark, Switzerland and the Netherlands. The four competitiveness assessment indicators are based on economic performance, government efficiency, business efficiency and infrastructure.

Therefore, the Job Creation Law is one of the engines for the government to increase 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 investors 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.

Meanwhile, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan emphasized that the government has prepared various regulations to support Indonesia’s economic transformation, especially in the investment sector. One of them is by issuing a job creation law and its derivative regulations. According to Luhut, the Job Creation Law will make the investment process easier.

He said that in the future the government will continue to focus on implementing these regulations to facilitate investment that drives Indonesia’s economic transformation. Thus, it will be easier for investment to enter the country.

Now is the time for Indonesia to improve so that it can take advantage of all the opportunities that exist, especially since the interest in investment by foreign investors from abroad is quite high, of course this will have an impact on increasing the economic sector in Indonesia.

Astrid Julian, author is a contributor to Lingkar Pers and Cikini Students

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