By: Alfi Pratama )*
The Job Creation Law (UU Cipta Kerja), passed in 2020, is a government initiative to carry out reforms to accelerate economic growth in Indonesia. This law aims to simplify regulations that have been considered to hamper business and investment activities.
One of the main impacts of the Job Creation Law is increased investment, both from local and foreign investors. By accelerating and simplifying the business licensing process, this law makes Indonesia more attractive to global investors. This increased investment will encourage the creation of new jobs, industrial development, and infrastructure development, all of which have a positive impact on the national economy.
The Job Creation Law also provides convenience for small and medium enterprises (SMEs) and start-ups to grow. With easier regulations and supportive incentives, more people are encouraged to start businesses. The more companies that grow, the more jobs will be available, helping to reduce the unemployment rate in Indonesia. In addition, flexibility in the employment system allows companies to adapt more quickly to workforce needs.
In addition, the positive impact of the implementation of the Job Creation Law is the creation of sustainable national economic growth. This growth is supported by an increase in people’s purchasing power which is strengthened by various policies included in the law. According to an economic expert from Gadjah Mada University (UGM), Prof. Dr. Gunawan Sumodiningrat, the main mission of the Job Creation Law is to eradicate poverty in Indonesia. Furthermore, Prof. Gunawan explained that this law was designed to realize more equitable welfare, where everyone can feel a comfortable life, avoid hunger, and achieve happiness.
One of the key points of the Job Creation Law is the simplification of bureaucracy, which simplifies the business licensing process. Before this law came into effect, the licensing process in Indonesia tended to be complicated and time-consuming. Through the implementation of the Online Single Submission (OSS) System, business licensing reforms are carried out more efficiently, allowing MSMEs to more easily obtain business licenses and grow. This is an important step in expanding business opportunities and opening up more jobs in various economic sectors.
In a broader context, the Job Creation Law is also part of a series of systematic reforms aimed at increasing Indonesia’s competitiveness in the global arena. Through this reform, Indonesia seeks to strengthen technological capabilities, encourage innovation, and create legal certainty in business. Economic observer, Dendi Ramdani, emphasized that this structural transformation is a strategic step to prevent Indonesia from falling into the middle-income trap, where the country fails to develop towards high economic status.
The positive impact of the Job Creation Law can also be seen from the increase in foreign direct investment (FDI). Based on the World Bank report in the Indonesia Economic Prospect (IEP) publication, the Job Creation Law has succeeded in reducing trade and investment barriers by up to 10 percent. This is a strong signal to foreign investors that Indonesia is increasingly competitive as an investment destination. With regulatory reforms and incentives for investors, capital inflows have increased, which in turn has accelerated infrastructure development and opened up new jobs.
On the other hand, the government remains committed to maintaining a balance between economic growth and protection of workers’ rights. Spokesperson for the Coordinating Ministry for Economic Affairs, Haryo Limanseto, emphasized that the government will continue to ensure that the implementation of the Job Creation Law is in line with the protection and welfare of workers. Given the ever-changing economic challenges, the government is ready to anticipate the economic crisis through concrete steps in this law.
Researcher from the Center for Indonesian Policy Studies (CIPS), Thomas Dewaranu, also noted that the positive impact of the Job Creation Law is increasingly visible. One indicator is the reduction in costs and time required to process business permits. In addition, this law makes it easier for MSMEs to meet environmental requirements, such as eliminating the obligation to have Environmental Management Efforts (UKL) and Environmental Monitoring Efforts (UPL) for small businesses. However, Thomas emphasized the importance of judicial reform to support ease of doing business, and asked the government to open up wider dialogue to improve this law so that it is more inclusive and beneficial for all parties.
Overall, the implementation of the Job Creation Law provides real benefits in strengthening the national economy. This policy has a positive impact not only for large entrepreneurs, but also for MSMEs and the general public, by opening more jobs, reducing poverty, and encouraging equitable economic growth. Although there are challenges in its implementation, this law has the potential to bring significant changes to the Indonesian economy, so that it can improve people’s welfare and strengthen the country’s competitiveness in the global market.
It is hoped that the implementation of the Job Creation Law will continue to provide opportunities for Indonesia to improve the quality of the economy and increase people’s welfare in the future.
)* Economics Student of STIE AMM
