Press Statement of President of the Republic of Indonesia on Job Creation Law (UU Cipta Kerja), Friday, 9 October 2020 at the Bogor Presidential Palace, West Java Province
Assalamu’alaikum warahmatullahi wabarakatuh.
Ladies and Gentlemen, my Fellow Countrymen,
This morning, I led a virtual Limited Meeting on the Job Creation Law with government officials and governors joining the meeting.
The Law covers eleven clusters that generally aim to carry out structural reforms and accelerate economic transformation. The eleven clusters, namely, are simplification of licensing procedures, investment requirements, manpower affairs, land acquisition, ease of doing business, research and innovation support, government administration, imposition of sanctions, ease of empowerment and protection of MSMEs, investment and government projects, and economic zones.
In the Limited Meeting, I emphasize why we need a Job Creation Law.
First, approximately 2.9 million people of new working age, young people enter the labor market every year. Thus, the need for new jobs is very urgent. Amid the ongoing (Covid-19) pandemic, approximately 6.9 million people become unemployed and 3.5 million workers have been affected by the COVID-19 pandemic. And 87 percent of the total working population has an education level of senior high school and below, of which 39 percent has elementary school education. To that end, it is necessary to create new jobs, particularly in labor-intensive sector. Hence, the Job Creation Law aims to provide as many jobs as possible for job seekers and the unemployed.
Second, the Job Creation Law will make it easier for the people, particularly micro and small businesses to open new businesses. Overlapping regulations and complex procedures are trimmed. Business licensing for micro and small enterprises (MSEs) is no longer required. It only requires a registration. It’s so simple. The establishment of a limited liability company or PT is also made easier through elimination of a minimum capital limitation. The same goes with the establishment of cooperatives where it takes only nine people to establish cooperatives. We hope there will be more cooperatives in the country. As for MSEs in the food and beverage sector, the cost for halal certification is borne by the Government; it is free of charge. To obtain a fishing boat license for fishermen, for example, one only goes to Ministry of Maritime Affairs and Fisheries’ work unit. Previously, one must apply for the license to Ministry of Maritime Affairs and Fisheries, Ministry of Transportation, and other institutions. Now it is sufficient from the Ministry of Maritime Affairs and Fisheries’ unit.
Third, the Job Creation Law will support the Government’s efforts to prevent and eradicate corruption. This is obvious because by simplifying, cutting, and integrating the procedures into electronic licensing system, illegal levy practices can be eliminated.
However, I notice there are rallies to oppose the Job Creation Law due to disinformation regarding the substance of this Law and hoaxes circulating on social media.
For example, information on the abolishment of the Provincial Minimum Wage (UMP), the City / Regency Minimum Wage (UMK), the Provincial Sectoral Minimum Wage (UMSP). That is false information. In fact, the Regional Minimum Wage (UMR) still prevails.
Regarding information on the minimum wage which stated it is calculated based on an hourly basis, it is also false information. Nothing has changed with the current system. Wages can be calculated based on working time and the outcome.
Then, there is also information stating that all leaves such as sick leave, marriage leave, circumcision leave, baptism leave, death leave, and maternity leave are abolished and there is no compensation. I assure you that it is not true. Leave rights will still be there and are ensured.
Next, can the company unilaterally lay off its workers at any time? This is also not true. Conversely, the company cannot lay off its workers unilaterally.
Another question is about the issues on social security and other welfare that are removed. The truth is, social security still remains.
Other disinformation includes the elimination of environmental impact analysis (amdal) requirements. It is also not true. The environmental impact analysis still persists. Big industries must carry out thorough analyses, while for MSMEs, the emphasis is more on mentoring and supervision.
There is also news saying that the Job Creation Law will encourage the commercialization of education. This is also not true. What is regulated is only formal education in the Special Economic Zones (KEK), while education licensing is not regulated in the Job Creation Law. Likewise, licensing for education in Islamic boarding schools is also not regulated in the Job Creation Law and its existing rules remain in effect.
Moreover, regarding a land bank. It is needed to ensure public interest, social interest, national development interest, economic equality, and land consolidation, as well as agrarian reforms. It is crucial to ensure community access to land ownership. To date, we do not have a land bank.
I also assure you that the Job Creation Law does not regulate a recentralization of authority from the regional governments to the Central Government. In fact, business licensing and supervision are still carried out by regional governments in accordance with the Norms, Standards, Procedures and Criteria (NSPK) set by the Central Government. It aims to create good service standards in all regions. And the stipulation of the NSPK will be regulated in a Government Regulation.
In addition, the regional governments still have the licensing authority over business non-licensing and no changes are made. In fact, we simplify, standardize the types and procedures of doing business in the regions and business permits in the regions are given a time limit. This is the most important. Thus, there is a service level of agreement; the permit application is deemed to have been granted if the time limit has passed.
I need to reiterate that the Job Creation Law needs a lot of government regulations and presidential regulations. So, afterwards, there will be government regulations and presidential regulations which will be completed three months at the latest after the law is passed. The Government invites the public to provide insights. And It is still open for suggestions and inputs from the regions. The Government believes that through the Job Creation Law, millions of workers can improve their lives and also the livelihoods for their families. And if there is still dissatisfaction with the Job Creation Law, please file a judicial review with the Constitutional Court (MK). It is regulated in our constitutional system. So, once again, those who are not satisfied with and opposed to the Job Creation Law may file a judicial review at the Constitutional Court.
That concludes my remarks on this auspicious occasion.
I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.
Translated by Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation, Cabinet Secretariat of The Republic of Indonesia