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The Job Creation Law Encourages UMKM Partnership Schemes to Boost the Real Sector in Indonesia

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By : Maya Naura Lingga )*

The Job Creation Law (UU Ciptaker) is able to encourage the existence of partnership schemes with Micro, Small and Medium Enterprises (MSMEs), which means it is also able to further stimulate the real economic sector in Indonesia.

With this partnership scheme for MSME players, it also aims to eliminate the rate of extreme poverty in the country. Regarding this matter, the Secretary of the Job Creation Law Task Force, Arif Budimanta, explained that this scheme had indeed become the target of the President of the Republic of Indonesia (RI), Joko Widodo (Jokowi) in order to bring the extreme poverty rate in this nation to zero percent. in 2024.

Apart from that, it is also hoped that with the existence of a partnership scheme as in the Job Creation Law, in the future we will be able to create equal conditions so that no party is left behind in the entire process of Indonesia’s growth and development.

Eliminating groups of people with extreme poverty has become part of the Sustainable Development Goals (SDGs) which will be targeted by 2030. However, to further speed up the implementation of this target, President Jokowi then gave instructions so that it could be implemented immediately in 2024.

The policy to eradicate extreme poverty itself through the Job Creation Law with a partnership scheme collaborating with MSME actors has been implemented in Presidential Instruction (Inpres) Number 4 of 2020 concerning the Acceleration of Elimination of Extreme Poverty. The government really hopes that with this partnership scheme, solidity can be built by involving large business groups and entrepreneurs at the medium, small and even micro levels.

The government also hopes that more and more partnerships can be established between large companies and MSME players. Because by becoming part of the supply chain of large companies, MSME players will be able to develop further and help national economic growth as well.

Not only that, but with a partnership scheme involving MSME players, they will automatically be able to increase job opportunities and enable them to run their businesses sustainably. The reason is, as is known, MSMEs are the sector that absorbs the largest workforce, namely up to 97 percent of total employment in Indonesia.

This employment generation is the result of MSMEs being able to be sustainable through a partnership concept or scheme with large companies as stated in the mandate of the Job Creation Law, so that in the end it will help the Indonesian Government’s mission to eradicate extreme poverty in the country.

Discussing the Indonesian Government’s efforts to accelerate the elimination of extreme poverty in Indonesia, Gadjah Mada University (UGM) Economics Expert, Prof. Gunawan Sumodiningrat said that the steps taken by the government were in accordance with the basic philosophy of the state, namely Pancasila which was also stated in the Preamble to the 1945 Constitution of the Republic of Indonesia.

In it, it was clearly stated that the Indonesian Government must be able to promote prosperity. in general by all means and through various concrete policy steps, such as implementing a partnership scheme with MSME actors in the Ciptaker Law. According to this expert, the Job Creation Law is also a regulation that creates job opportunities.

The existence of the Job Creation Law (UU Ciptaker) itself is also considered a form of autocriticism carried out by the Government. The reason is that since the reform era until now, many policies have been formed which can be said to overlap with each other, making it increasingly difficult for the real sector in society.

Regarding this matter, Economist from Sebelas Maret University (UNS) Surakarta, Lukman Hakim, explained that starting from this reality, the government carried out introspection and intensified deregulation on a large scale. Moreover, the response of the capital market to the Job Creation Law itself is also very good, as can be seen from the positive sentiment that emerged after the Omnibus Law was passed by the government.

Investors clearly expect a significant impact from this regulation, especially regarding trimming and simplifying all previous regulations which overlap with each other. When deregulation is carried out, it will automatically reduce the possibility or opportunity for corruption in the form of illegal levies (extortion).

It cannot be denied that so far the real sector has experienced quite a lot of difficulties, due to an increase in transaction costs, which apparently occurs due to rampant extortion when someone wants to start a business. When regulations overlap, this results in many problems, including many large companies choosing to leave Indonesia because the scope for extortion is very large.

The partnership scheme between large companies and MSMEs as stipulated in the Job Creation Law will clearly further stimulate the real sector in society. The reason is, this allows MSMEs to grow further so that they will also be able to create many jobs for the welfare of society in order to reduce the rate of extreme poverty.

)* The author is a contributor to Ruang Baca Nusantara

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