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Job Creation Law Creates a Conducive Investment Ecosystem


By : Kyara Savitri )*

The specialty of the existence of the Job Creation Law in our country is believed to be that it can improve the Indonesian economy. This law regulates job creation efforts which are expected to be able to absorb as wide a workforce as possible in Indonesia amidst increasingly competitive competition and the demands of economic globalization.

Job Creation is an effort to create jobs through efforts to facilitate, protect and empower cooperatives and micro, small and medium enterprises, improve the investment ecosystem and ease of doing business, and Central Government investment and accelerate national strategic projects.

One of the ten scopes of the Law is improving the investment ecosystem and business activities. As stated by the Socio-Employment Demography Expert from the National Research and Innovation Agency (BRIN), Nawawi, MA, Ph.D. who said that the Job Creation Law is a way out of the industrial conflicts that have been occurring in Indonesia.

He explained that the Job Creation Law is a way out for how we can create an investment and business climate whose aim will be to have a positive impact on various interests, including those of the government, employers and workers.

Nawawi believes that the pros and cons regarding the Job Creation Law are normal, but what is needed from all parties at this time is the need to create conditions in which economic stability can be achieved. Continuous conflict is also not good in our economic context. The investment climate is a very important condition when talking about labor economics.

He further stated that a good investment climate will have an impact on increasing production, which will ultimately impact economic improvement, job creation and increased economic growth.

Meanwhile, Co-Founder of the Young Intellectual Forum, Muhammad Sutisna, M. Si assessed that the issuance of the Job Creation Law is part of the structural reform of the Indonesian economy to avoid the trap of middle-income countries (middle-income-trao) in the future.

According to him, this step is the key to increasing the ability to master technology, encouraging innovation, strengthening business certainty, and creating a more conducive investment climate through improving the quality of the rules and regulations under it.

Supporting the Job Creation Law, he added, is an important step to encourage Indonesia’s economic transformation because in the future the implementation of this legal product has the potential to increase investment, improve the business climate and create jobs.

It is ensured that its implementation goes hand in hand with the interests of society, environmental preservation and workers’ rights. Apart from that, Sutisna said that transparency, public participation and strict supervision are the keys to ensuring that the Job Creation Law can provide sustainable benefits for Indonesia.

Therefore, the role of all parties, including government, civil society and business, is very important in navigating the journey towards successful economic transformation through the implementation of the Job Creation Law.

The implementation of the Job Creation Law can increase the interest of investors in the regions, as has been carried out by the Banda Aceh City Government through the One Stop Investment and Integrated Services Service (DPMPTSP). The activities carried out are to provide understanding to business actors about the importance of business legality which can be processed independently without lengthy bureaucracy as mandated by Law Number 11 of 202 concerning Job Creation.

In this case, the Head of DPMPTSP Banda Aceh, Andri invited business actors to discuss and dialogue in Technical Guidance activities for the Implementation of Risk-Based Business Licensing.

In improving the investment ecosystem, business legality is needed to support business activities, which is provided based on the risk level of each business activity.

This level of risk is important because every business activity contains the potential for injury or loss from a hazard or a combination of possible and resulting hazards.

Based on the assessment of the level of danger, assessment of the potential for danger, risk level and business scale ranking of business activities, it is necessary for all business actors to register their business permits first before carrying out business activities.

Apart from that, the Job Creation Law or Law is considered to have had a significant positive impact on increasing investment in Indonesia. This change is reflected in the  Institute for Management Development World Competitiveness Yearbook  2023 report. 

According to the report, Indonesia managed to rank 34th out of a total of 64 countries assessed. Prof. Nindyo Pramono, Professor of Business Law at Gadjah Mada University (UGM), said investors responded positively to structural reform efforts implemented through the Job Creation Law.

Based on an analysis report from the World Bank contained in the December 2022 Indonesia Economic Prospect (IEP) publication, the Job Creation Law has had a positive impact on increasing foreign investment (PMA). Total PMA realization increased by an average of 29.4% in the five quarters after the Job Creation Law was enacted.

Economic recovery requires economic stability and support from the Job Creation Law, which will create a conducive investment climate. If Indonesia’s economic fundamentals improve, this can provide an opportunity for our country as a promising and potential country for investment and is supported by improving social indicators.

It can be said that thanks to the Job Creation Law, it is hoped that it can encourage the expansion of employment opportunities through investment, accelerate national strategic projects, increase worker protection and welfare, and strengthen the national economy in facing the future global economic situation.

)* The author is a student at the Faculty of Economics

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