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The Implementation of the Job Creation Law Promotes the Performance of the Economic Sector

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By: Aulia Hawa )*

The Job Creation Act (UU Ciptaker) is a major innovation in summarizing regulations. With the implementation of these policies, investment flows will be even greater which can encourage the performance of the economic sector.

The year 2022 is a year in which people reorganize their lives after being battered by the Covid-19 Pandemic. Economic recovery after a slump during the pandemic, of course, requires a formula that can encourage the performance of the economic sector, one of which is the Job Creation Law.

We need to know that during the pandemic, there were 29.12 million workers in Indonesia who were affected by Covid-19. Even that number does not include part-time and underemployed workers who reach 55 million people.

With the Job Creation Law, Indonesia has a reliable instrument to solve everything, so it is hoped that it can become a strategy in increasing global competitiveness.

Coordinating Minister for Economic Affairs Airlangga Hartarto conveyed that Law Number 11 of 2020 concerning Job Creation is expected to carry out structural transformation, increase investment and accelerate economic growth. The Job Creation Law and its 51 Implementing Regulations have received positive appreciation from various international institutions.

He explained that the Job Creation Law reformed the approach in granting business permits from the previous one using the License-Based Approach to a Risk-Based Approach. Furthermore, the government will soon stipulate a Ministerial Regulation/Head of Institutions as a technical implementation guideline and operationalize the Online Single Submission (OSS) system in June 2021 so that it is hoped that investment can increase and more job opportunities and business opportunities will be created.

Among the derivative rules of the Job Creation Law that aim to encourage investment is Presidential Regulation Number 10 of 2021 which regulates the Investment Priority List. The government has determined more than 1,700 business fields open for investment, 245 priority business fields, 89 business fields allocated for partnerships with cooperatives and MSMEs, and 46 business fields with certain requirements.

In addition, the Job Creation Law also encourages job creation, facilitates the opening of new businesses as well as restores the national economy after the Covid-19 pandemic. The World Bank also said that the Job Creation Law was the most positive reform in Indonesia in the last 40 years in the field of investment and trade.

Another positive contribution of the Job Creation Law is that it is able to bring Indonesia out of the middle income trap. In this case, the Middle Income Trap is the failure of a country to upgrade from lower-middle income to upper-middle income. This condition often occurs in countries that are unable to move from middle income to high income. This is because they are no longer able to compete with lower-income countries that depend on natural resources and cheap labor. However, they are not able to compete with developed countries that rely on human quality and technology.

The assessment that the Job Creation Law is able to relieve Indonesia from the trap of a middle-class country was also expressed by the Minister of Finance (Menkeu) Sri Mulyani. He said that the law provides simple and efficient regulations. In addition, the Job Creation Law also contains regulations regarding the incubation of the creation and growth of new businesses, as well as strengthening the capacity of actors for start-up businesses. This law also makes it possible for Micro, Small and Medium Enterprises (MSMEs) to absorb more workers and make the formation of cooperatives easier.

The Job Creation Act not only regulates, but also creates a business climate so that it can continue to grow, attract investors to make it easier for MSME actors to develop their businesses. This of course will be a concrete step for improving the performance of the economic sector in Indonesia.

)* The author is a contributor to the Press Circle and Cikini Students

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