On Monday, October 5, 2020 through a Plenary Meeting, the House of Representatives (DPR) has passed the Job Creation Bill into the Job Creation Law (Job Creation Law or Omnibus Law). This sweeping law regulates 11 clusters, namely Simplification of Licensing, Investment Requirements, Employment, Empowerment and Protection of MSMEs, Ease of Doing Business, Research and Innovation Support, Government Administration, Imposition of Sanctions, Land Acquisition, Ease of Investment and Government Projects, and Special Economic Zones. The government stated that the Job Creation Law will provide a breath of fresh air for the Indonesian economy. What is the impact of the Job Creation Law on the business world? The Job Creation Law provides convenience for Micro, Small and Medium Enterprises (MSMEs) players, namely accelerating the licensing process where MSMEs only need to be registered through the Online Single Submission (OSS). In order to empower MSMEs, the central and regional governments, state and regional-owned enterprises, or private enterprises are obliged to allocate the provision of promotional places for MSMEs in public infrastructure, such as terminals, airports, ports, train stations, rest areas, and others. The government also supports funding for MSMEs through the Special Allocation Fund (DAK) and makes it easier for businesses to register Intellectual Property Rights (HAKI) for their business products. Then, MSEs will be given a fee exemption to obtain halal certification and the expansion of the Halal Examining Institution which can be carried out by Islamic organizations and state universities. Legal assistance and protection services for MSEs will also be provided by the government. The many facilities provided will trigger people’s desire to build MSMEs, so that labor absorption will also increase. The Job Creation Law also amends several provisions of Law No. 40/2007 on Limited Liability Companies (PT Law). The PT Law states that in establishing a Limited Liability Company (PT), the authorized capital required is IDR 50,000,000. The provision is amended that the authorized capital in the establishment of a PT is determined based on the decision of the founders of the company. The Job Creation Law also states that a PT obtains legal entity status after being registered with the Minister and obtaining proof of registration. This is clearly different from the PT Law which stipulates that a PT obtains legal entity status on the date of issuance of the Ministerial Decree regarding the legal entity’s ratification. Furthermore, the PT Law regulates the necessity of establishing a PT by 2 or more people, but in Article 7 Paragraph 7 of the PT Law, this provision can be deviated from. Through the Job Creation Law, there is an addition for companies that can deviate from this rule, namely companies that meet the criteria for micro and small businesses, so that the company can be established by one person only. Again, the government makes it easy for people to start a business. Another way for the government to improve the investment ecosystem and business activities is to simplify business licensing from the initial permit-based to risk-based and business scale activities. The determination of the level of risk and business scale is obtained based on an assessment of the level of danger to health, safety, environment, utilization and management of resources, and volatility risk.
Risk levels and business scale ratings are differentiated into low, medium, and high. For business licensing for low-risk business activities, only a Business Identification Number (NIB) is required. Medium-risk businesses require an NIB and a standard certification statement. Meanwhile, high-risk businesses must have an NIB and obtain a license from the central government to carry out their business activities. The regulation is intended to attract investors to invest in Indonesia. The Job Creation Law also has an impact on employment in Indonesia. In Law Number 13 of 2003 concerning Manpower (Manpower Law), the severance pay given by the employer company is 32 times. Meanwhile, the Job Creation Law changes the provision to 25 times severance pay consisting of 19 times from the employer company and 6 times by the government through the Job Loss Guarantee Program (JKP). JKP is organized to maintain a decent standard of living when workers/laborers lose their jobs. JKP benefits can be in the form of cash, access to labor market information, and job training. In addition, the Job Creation Law stipulates that in the event that a Fixed Term Agreement (PKWT) ends, employers are obliged to provide compensation money to workers/laborers. This shows that the Job Creation Law provides additional protection for contract employees or PKWT employees. Read also:
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The complexity of business licenses in Indonesia is often an obstacle for investors to invest and develop their business in Indonesia. According to a World Bank report, Indonesia’s ease of doing business ranking in 2020 is still the same as last year, which is in 73rd position out of 190 countries. This fact is still very far from the target set by President Jokowi at number 40. The existence of the Job Creation Law can advance competitiveness and encourage positive growth in investment into Indonesia. If this is achieved, many jobs will be created and spur the recovery of the national economy due to the global pandemic. How about it? Are you more excited to start a business? Don’t worry because Kontrak Hukum will help you from the beginning of the business establishment to the legality management. Kontrak Hukum guarantees to provide the best legal services for your business. Come on, contact us immediately at the Ask KH link .
