By: Asri Purwanti
The Labour Creation Act has been a hot topic since it was passed in 2020. Despite the varied reactions from all walks of life, the Labour Creation Act now shows a significant positive impact on micro, small, and medium-sized enterprises. Through various structural reforms and deregulation, it has proved to be able to provide fairer access and facilitate the process of efforts for the UMKM.
One of the main objectives of the Labour Creation Act is to create equality of access for UMKM. The Secretary of the Labor Creation Agreement, Arif Budimanta said that the Work Creation Law seeks to make structural changes in terms of services, licences, as well as equal access for small and medium-sized enterprises and micro-enterprises. In this effort, the government not only introduced new regulations but also required a change in bureaucratic behavior to create a new way of working between government and society.
In the planned Work Act Progress book that will be published, it is expected to explain the background and purpose of the drafting of this law. The book will also be a reference for various parties including ministries, institutions, local government, academics, business community, and UMKM to understand the importance of the Work Act and how its implementation can provide significant benefits.
The Secretary-General of the Association of UMKM Indonesia (Akumindo), Edy Misero, expressed his hope that the Law on Creation of Work can encourage the acceleration of the business activities of the UMKM. According to Edy, with mature preparation and implementation in accordance with the provisions of the Work Creation Act, UMKM is expected to be accelerated faster and easier.
Edy Misero also emphasized the importance of UMKM to adopt the development of digital technologies. The challenge of digital technology progress is one of the aspects that must be faced by UMKM actors in order to be able to compete and thrive in this modern era. Thus, the Labour Creation Act not only focuses on regulatory aspects but also encourages entrepreneurs to adapt to changing times.
Before the Labour Creation Act, the business licensing process often took months and was full of complicated bureaucracy. However, with this law, the government has enforced the Space Usage Activity Compliance System (KKPR) which is the first gateway before permits are issued. Rahma Julianti, Director of Synchronization of Space Usage of the Ministry of Agriculture and Space Administration (ATR) and National Farming Agency (BPN), said that the CCPR agreement can now be issued within 20 working days, much faster than before.
Simplification of the licensing process is crucial to UMKM as it allows them to start and develop business faster and more efficiently. Thus, the Labour Creation Act has managed to overcome one of the greatest obstacles faced by UMKM perpetrators, the overwhelming bureaucracy.
One of the main reasons behind the creation of the Labour Act is to address the regulatory obesity that has been a barrier to business growth and investment in Indonesia. A lot of overlapping rules cause confusion and difficulties for entrepreneurs. Therefore, the government decided to use the omnibus law method in drafting the Labour Creation Act so that there was simplification in the context of bureaucracy.
Dendy Apriandi, Director of Deregulation of Capital Cultivation at the Ministry of Investment, said that the Labour Creation Act should be a good legacy because the challenges and efforts that have been undertaken have been extraordinary. This simplification of regulations not only provides facilities for entrepreneurs but also promotes a more favourable investment climate in Indonesia.
President Joko Widodo’s order on the importance of changing bureaucratic behaviour in the implementation of the Labour Creation Act is the key to the success of this law. According to Arif Budimanta, these behavioural changes are not just a regulatory understanding but should also include new ways of working that are more efficient and responsive to the needs of the public and entrepreneurs. It is in line with the principle of meaningful participation implemented by the government through various socialization, discussion, and coordination meetings with the community and related stakeholders.
Although the Work Act has shown a number of positive impacts on UMKM, the challenge remains. One of the main challenges is to ensure that all parties, including governments and entrepreneurs, perform their functions and roles in accordance with the established provisions. In addition, UMKM players also have to continue to adapt to technological developments and market changes in order to remain competitive and prosper.
However, with the strong commitment of the government and the active participation of the public, the objective of the Labour Creation Act to advance UMKM and create a stronger and more autonomous economy can be achieved. Edy Misero is optimistic that Indonesia can become a strong economy by 2045 if the Labour Creation Act is implemented properly and consistently.
Overall, the Labour Creation Act has proven itself to be an effective tool to advance UMKM in Indonesia. With regulatory simplification, accelerated licensing processes, and a boost to the adoption of digital technology, this law opens up greater opportunities for UMKM to grow and thrive. For the future, cooperation and commitment of all parties is required to ensure that the positive impact of the Labour Creation Act can be felt by all the entrepreneurs in Indonesia.
*The author is an Economic Observer
