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The Job Creation Law Can Increase Economic Growth


By: Gita Oktaviani )*

Many parties are optimistic about the Job Creation Law, which will boost Indonesia’s economic growth. This law has an investment cluster that will have a positive impact on the country’s economy, because it is very friendly to foreign investors. With the dynamics of the investment world, the country’s finances will be better.

Indonesia is on the rise after 3 years of being hit by the Covid-19 pandemic. The most severe impact of the pandemic is in the economic field, especially when there is a threat of a global recession. However, the government does not remain silent and is trying hard to save the country’s economy, one of which is by passing the Job Creation Law.

The Ministry of Manpower (Kemenaker) is optimistic that Law Number 2 of 2022 concerning Job Creation (UU Cipta Kerja) will become a regulation capable of encouraging increased investment and economic growth in Indonesia.   

The Director General for Development of Industrial Relations and Labor Social Security (PHI and Jamsos) of the Ministry of Manpower, Indah Anggoro Putri stated that her party is very optimistic that the existence of the Ciptaker Law will be as expected, namely that it can create a conducive investment climate while at the same time encouraging additional jobs.

Thanks to the Job Creation Law, investment realization in the first quarter of 2023 reached IDR 328.9 trillion, an increase of 16.5 percent on an annual basis or  year on year (yoy) . The existence of the Job Creation Law is very important for the national interest, considering that various international institutions predict that the global economy will be filled with uncertainty throughout 2023. 

The Job Creation Law is an anticipatory step in dealing with uncertainty (because there is a threat of a recession) and at the same time guarantees the creation of legal certainty for investors, especially foreign investors. This law also simplifies the bureaucracy because the processing of permits and other things is not complicated, but is expedited via an  online  single submission.

It is hoped that the bureaucratic changes that occurred after the Job Creation Law was enacted will make people’s lives easier, because there is no need to be bothered by confusing regulations anymore. In addition, if traders are facilitated, it will help in rolling back the wheels of the economy in Indonesia and can encourage its growth.

The leading cluster in the Job Creation Law is the investment cluster. The money from the investors will be used to boost economic growth in Indonesia. This fund is not a loan, but is provided for a cooperation project with Indonesia. The level of security is also high, because it is regulated by an investment management institution. Make sure there is no cheating in it.

The Coordinating Minister for the Economy Airlangga Hartarto stated that the Job Creation Law would not only help big sector investments, but also help small and medium entrepreneurs. Because the target of the Job Creation Law is to empower small and medium entrepreneurs, so that the contribution of MSMEs to GDP increases to 65%.

Assistance from the government in the form of the Job Creation Law is very grateful for small and medium entrepreneurs. Because thanks to the MSME cluster, it is easy to get a business license. In the new regulation, MSMEs are included in low risk businesses. So that you only need a business license number (NIB), without having to take care of complicated and expensive HO permits.

If there is already a business license number, then UMKM is considered a legal business. They can export their products, because if they enter the international market, they must have a business license granted by the government. So that the business of MSME businessmen will be more advanced, because they have entered the realm of exports and get profits in dollars.

The Job Creation Law also encourages MSMEs to go international and enter the export market. One of the export requirements is having a business license, while in the past not all MSME businessmen had one, due to the cost factor. But now licensing is simplified, accelerated, and free of charge. So that MSMEs that will export can expand the market.

If MSMEs are facilitated to export, then they will benefit in dollars. So the results are even more. The existence of the MSME business, which had declined due to the pandemic, was able to revive, because it found new markets abroad. Finally, MSMEs can develop and reduce unemployment, because they recruit new employees.

Why does the Job Creation Law help MSME businessmen? The reason is because they are the backbone of the Indonesian economy, and 90% of entrepreneurs in this country are at the small and medium level. If MSMEs progress, the country’s economy will also progress automatically.

Meanwhile, Saidiman Ahmad, a public policy researcher from a research institute, stated that the Job Creation Law is part of Indonesia’s economic transformation. In a sense, this law will raise Indonesia’s financial condition again, because it will create a positive domino effect in the economic sector.

Saidiman continued, there were 3 things the president had done for economic transformation. The first is infrastructure development that is evenly distributed and massive. While the second is human resource development, and the third is institutional, namely the omnibus law on the Job Creation Law.

What is meant by economic transformation is a series of changes that are interrelated to each other in production, imports, exports, and the necessary factors of production. To support the process of development and economic growth. 

Many parties are optimistic that the Job Creation Law will encourage economic growth in Indonesia. This law will improve the country’s financial condition because it increases the amount of investment and foreign exchange, because it is very friendly to foreign investors. Then, MSME entrepreneurs are also facilitated in obtaining permits so as to make their business more advanced.

)* The author is a Contributor to the Windows Baca Institute

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