President Jokowi’s Commitment to Accelerating Licensing and Investment Processes through the Job Creation Law
By: Winda Hapsari Putri )*
The Job Creation Law (UU Cipta Kerja) is a new step taken by President Jokowi to accelerate economic growth through regulatory reform. One of the main objectives of this law is to accelerate the business licensing process and facilitate investment, both domestically and abroad. For years, Indonesia has been faced with complicated bureaucratic problems, which often slow down investment and hinder business growth. With the presence of the Job Creation Law, these obstacles are expected to be minimized, so that Indonesia becomes more competitive in attracting investment.
Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized Indonesia’s commitment to improving competitiveness and investment climate through structural reforms integrated into Law No. 11 of 2020 concerning Job Creation. This law, known as the Omnibus Law system, combines 76 different regulations into one unit to simplify the licensing process and create a more conducive business environment.
The Job Creation Law is designed to address the various challenges faced by business actors in Indonesia, including complicated licensing procedures and inadequate environmental protection. One of the main features of the law is the simplification of business licensing procedures, which were previously known to be complex and time-consuming. By introducing the latest version of the Online Single Submission (OSS) System, the government aims to make the licensing process more efficient and transparent.
The latest OSS system adopts a risk-based approach (RBA), which allows licensing to be adjusted based on the risk level of each business. For example, licensing procedures for Micro, Small, and Medium Enterprises (MSMEs) are different compared to large businesses, which are considered to have higher risks. This aims to reduce the administrative burden for MSMEs, so that they can focus more on developing their businesses. The government is committed to continuing to monitor and supervise the implementation of this new version of OSS, ensuring that the system functions properly and provides maximum benefits for business actors.
The Job Creation Law also prioritizes convenience for MSMEs by eliminating a number of burdensome regulations, such as the requirement for an Environmental Impact Analysis (AMDAL) for businesses that are considered not to have a significant impact on the environment. The elimination of this requirement is expected to make it easier for MSMEs to start and manage their businesses without having to face heavy bureaucracy.
In addition, the Job Creation Law also brings significant changes to employment regulations, with the aim of increasing labor market flexibility and creating wider employment opportunities. These reforms include changes in wage regulations, employment contracts, and workers’ rights, which are expected to create a more dynamic and adaptive work environment to economic changes.
To support the achievement of the objectives of the Job Creation Law, the government has also launched the Investment Priority List (DPI) through Presidential Regulation (Perpres) No. 10 of 2021. This DPI contains a list of priority sectors that include National Strategic Projects (PSN), the latest technology, pioneering industries, export-oriented industries, and research and development. These sectors are considered strategic for economic growth and are expected to attract significant investment.
To strengthen and optimize long-term investment, the Indonesian government has also established the Investment Management Institute (LPI). LPI is tasked with increasing, prioritizing, and managing investments that support sustainable development. With the establishment of LPI, the government hopes to attract more international and domestic investment that will support infrastructure development and other strategic projects in Indonesia. LPI will play an important role in managing investments that support long-term economic growth and sustainable development.
Meanwhile, legal observer and academic, Faisal Santiago, argued that the ratification of this Perppu into law offers many benefits for Indonesia. According to Faisal Santiago, this law provides various conveniences for the community and investors, including simplifying business and investment processes. Faisal Santiago said that the Job Creation Perppu is an important step by the government to create jobs and ensure legal certainty.
Faisal emphasized that the Job Creation Law can attract investors by providing legal certainty. This certainty is expected to increase investor confidence in investing their capital, which will ultimately encourage job creation in Indonesia. Faisal also noted that this law provides many conveniences to the public in doing business, such as a simpler licensing process, easier formation of business entities, stimulus and support for MSMEs, and acceleration in halal certification, which is highly anticipated by business actors.
The Job Creation Law brings significant changes in accelerating the licensing process and facilitating investment in Indonesia. With the simplification of bureaucracy, increased convenience for MSMEs, and regulatory reform to attract foreign investment, this law has the potential to drive faster economic growth. In the long term, it is hoped that this policy will strengthen Indonesia’s competitiveness in the global market, create jobs, and improve people’s welfare. Proper implementation and good supervision will be the key to the success of this law in driving sustainable economic development.
)* World Economic Observer, Gala Indomedia Institute
