By: Clara Diah Wulandari )*
The global recession in 2023 is very troubling and it is also happening in big countries like the United States. The government is trying hard so that Indonesia is not affected by the global recession. This is done by passing the Job Creation Law, which has a positive impact on the economy and investment in Indonesia, so as to avoid a lurking recession.
A recession is a situation when a country’s economy has fallen for more than 2 quarters. The global recession happened as and one of the causes was the covid-19 pandemic for almost 3 years. Many companies are laying off their employees, because their turnover has dropped dramatically and they cannot maintain cash flow.
To avoid a global recession, the government passed the Job Creation Law. Coordinating Minister for the Economy Airlangga Hartarto stated that the global economy continues to be hit by challenges that could trigger a recession. This condition is referred to as “The Perfect Storm”. Therefore, the Job Creation Law prevents the impact of global economic vulnerabilities that have the potential to have a significant impact on the national economy.
Airlangga added, the Job Creation Law is one of the steps to mitigate the impact of the global crisis. It’s like preventing is better than putting out a fire. Perpu Cipta Kerja prevented fires from occurring and spreading
Summarizing various reports on the global economy, including those from the IMF, World Bank and OECD, the challenges that will be faced are: the unfinished COVID-19 pandemic, higher inflation after the recovery from the pandemic, the Russia-Ukraine war, to the tightening of financial conditions in various countries. countries in the world which then led to a slowdown in the global economy.
Even though conditions in various countries are starting to ease, the COVID-19 pandemic is not over yet. Various countries are still reporting an increase in the number of daily active cases, especially in some countries where vaccination rates are still low.
As a result, the economy faces the challenge of stagflation and has the potential to experience a recession. In 2023, the condition of weak demand accompanied by supply which is still declining sharply due to supply chain disruptions, raises the risk of stagflation, namely economic stagnation accompanied by high prices (inflation).
The Job Creation Law, which was born in the midst of the Covid-19 pandemic, has transformed into a strong foundation in helping Indonesia survive uncertainty and economic shocks during the Covid-19 pandemic.
Deputy Minister of Finance (Wamenkeu) Suahasil Nazara stated that Indonesia is entering 2023 with high economic uncertainty due to the threat of a global recession. One third of the world’s countries are threatened with a recession, the impact of tightening monetary policy which is the impact of rising inflation conditions throughout the world. Rising inflation conditions disrupted price stability.
Suahasil Nazara continued, when one third of the world is experiencing a recession, two thirds of countries will definitely be affected. Indonesia is not one of the countries that will be hit by a recession, but must anticipate the threat of a recession by exercising business certainty.
One of the things that is important in Indonesia is business certainty. This is where the Job Creation Law comes in. This law creates certainty so that Indonesia can face a world recession which is predicted to come in 2023.
In a sense, the Job Creation Law saved Indonesia from the threat of a recession because there is certainty in doing business, both for local and foreign entrepreneurs. Local businesses can develop because there is a MSME cluster in this law. Where entrepreneurs at the small and medium level make it easier to do business, because there is free processing of business license numbers (NIB) and also MUI halal status.
With NIB, local entrepreneurs can develop their business because it is considered valid by the state and trusted by banks or finance companies. He can get a business capital loan and enlarge his business, so that it can grow and get satisfactory results. Entrepreneurs will be free from the threat of recession because their sales will remain good as if there were no pandemics and recessions.
In addition, with the enactment of the Job Creation Law, it will be easier for local businesses to obtain halal status by self-declaring. The process is easy, fast, and free of charge by the government. With halal status, it will convince prospective buyers and selling goods are selling well. They are no longer afraid of a recession because their turnover continues to rise.
The Job Creation Law is a form of improvement to the first version of the Job Creation Law (2020) through a public participation mechanism. The aim is to create jobs by increasing the ease and certainty of doing business, investment growth, as well as protection and empowerment for MSMEs amid global economic uncertainty. Recessions and pandemics cause world economic shocks and must be countered by the Job Creation Law.
With the issuance of this law, we can improve state laws and regulations so that the Indonesian economy can deal with conditions that are not ideal in this world, improve the investment climate, strengthen investment in Indonesia, and create jobs, and people can better deal with world uncertainties. .
The Job Creation Law is able to help Indonesia from the threat of a global recession and the impact of a pandemic. The reason is because this law can attract foreign investors to invest their capital and increase the country’s foreign exchange. Thanks to the Job Creation Law, local entrepreneurs can also develop their business, because there are conveniences that can be obtained from the MSME cluster.
)* The author is a contributor to Nusantara Reading Room