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Newsroom – 10 March 2021

On 2 November 2020, President Joko Widodo has signed into law the job creation bill which was previously passed by the House of Representatives (Dewan Perwakilan Rakyat or DPR) on 5 October 2020. The bill was then officially named as Law Number 11 of 2020 regarding Job Creation (“Job Creation Law”). Following to this promulgation, the government is currently in the process of drafting various implementing regulations to fill in the gaps arising from the passage of this new regulation.

The Job Creation Law is one of the government’s strategic policies to improve the social welfare by creating and expanding jobs through improving the investment and business activities ecosystem; increasing protection and welfare of workers; easing empowering, and protecting the Cooperatives and Micro, Small, Medium Scale Enterprises (SMEs); and increasing government’s investment and accelerating national strategic projects. Since the drafting process until the promulgation, the Job Creation Law has provoked debates on pros and cons and even rejection from the public, including the concerns from several global investors. These  concerns were, among others, that the Job Creation Law may potentially harm the investment climate, create uncertainty, and have a negative impact to the environment, human rights, and labour.

The Job Creation Law utilizes the concept of omnibus law, which not only containing new norms, but also altered, deleted, and revoked several other regulations at once. This concept is not new and have previously been applied in Law Number 5 of 1960 regarding Basic Agrarian Principles. The complexity and profusion of current regulations are considered as one of the main obstacles that tend to curtail the creation and development of businesses, also considering the effectiveness and time efficiency, the amendment process of these bulk of regulations cannot be done conventionally by amending one by one, are several reasons for the government to use the omnibus law concept in preparing this Job Creation Law. The promulgation of the Job Creation Law has various implications, especially on the legal side, which among others, amended or revoked previous laws and regulations, as well as requiring comprehensive implementing regulations. The pros and cons on the promulgation of the Job Creation Law, both in terms of the procedure and the substance of the law, have led many actors filing judicial review on the Job Creation Law to the Constitutional Court.

We are closely monitoring the developments surrounding the Job Creation Law and will be preparing various articles, in which will be published in MAGNAAR Legal Insights (MLI). Given the dynamic nature of the Job Creation Law and the fast pace of law and politics in Indonesia, our article will probably not comprehensively cover all issues and materials. However, our article will be based on the information and updates available at the time of publishing. We will keep you posted.