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UGM Business Law Expert: The urgency of the Job Creation Perppu is the President’s discretion


The issue of urgency forcing the Job Creation Law in conjunction with Perppu Number 2 of 2022 is at the discretion of the President. In this case, it is an effort to prevent Indonesia from entering into a situation of stagflation (crisis). This was confirmed by Gadjah Mada University business law expert, Professor Nindyo Pramono, to the media today.

“Regarding the urgency of forcing, of course it is a discretion that is within the scope of the President’s authority. The issuance of the Perppu was decided by the President, so that Indonesia would not enter into a crisis situation,” explained Nindyo.

For this reason, according to Nindyo, anticipatory action with Perppu Cipta Kerja Number 2 of 2022 is the right action. “Without having to wait for a crisis to occur first, then we are all at a loss to get out of the crisis. Not to mention if chaotic situations such as 1997-1998 are repeated,” said Nindyo.

“Because I believe, if we are willing to think wisely and wisely, of course none of the nation’s children would want the events of 1997-1998 to happen again,” he added.

Nindyo even noted that several previous Perppu also did not explain the crisis of coercion at all. First, Perppu No. 1/1998 concerning Amendments to the Law on Bankruptcy. This Perppu was born in the midst of a crisis in 1997/1998 where the issue of ‘forced urgency’ at that time was heavily nuanced by economic considerations.

“At that time the government spent Rp. 600 trillion in bailout funds, never said firmly that the country was in a state of emergency (staad noodrechts),” explained Nindyo.

Second, Perppu No. 1/2000 concerning Free Trade Areas also does not mention the existence of a compelling crisis. Third, Perppu No 1/2004 concerning Amendments to Law No 41/1999. There is not a single sentence which states that there is a urgency forcing this Perppu to be issued.

Fourth, Perppu No. 1/2014, which annuls Law No. 22/2014 on Pilkada, also does not explain the existence of a coercive crisis. The reason used, Law No. 22/2014 concerning the Election of Governors, Regents and Mayors which regulates the election mechanism indirectly through the DPRD has received widespread rejection from the people.

On the other hand, Nindyo said that the presence of Perppu Number 2 of 2022 concerning Job Creation was considered important for the interests of the investment climate, which had always lagged behind ASEAN countries, such as Malaysia, Thailand, Singapore and Vietnam.

This is because the complicated licensing procedures in Indonesia seem to have become a problem that does not attract investment interest in the country.

“Objectively, bureaucratic licensing is one of the obstacles to increasing investment through ease of doing business,” said Nindyo.

Nindyo said investors often demand several facilities, including, first, consistent laws and regulations that guarantee legal certainty in the long term. Second, the licensing procedure is not complicated which results in a high economic cost.

“Third, guarantees for investment and legal protection for intellectual property rights (IPR) and finally supporting facilities and infrastructure, including communications, transportation, banking and insurance,” concluded Nindyo. (*)

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