13 November 2020
Indonesia

Much-Awaited Enactment of the Job Creation Law

After the House of Representatives passed the Job Creation Bill on 5 October 2020, the much-awaited Job Creation Law (or commonly referred to as the Omnibus Law) was finally enacted on 2 November 2020 as Law No.11 on Job Creation (“Law 11”), almost one year since it was first discussed by the legislatives.

Law 11 consists of 186 articles and amends a total of 1,244 articles in 79 laws.  It also introduces new concepts pertaining to Land Bank and central government investment.  The following laws are among those amended by Law 11:

  • Law No.13 of 2003 on Manpower;
  • Law No.25 of 2007 on Investment;
  • Law No.40 of 2007 on Limited Liability Companies;
  • Law No. 32 of 2009 on Environmental Protection and Management;
  • Law No.1 of 2009 on Aviation; and
  • Law No.13 of 2016 on Patent.

At its core, the law aims to:

  • create new jobs by providing ease of doing business, protection and empowerment to cooperatives, Micro, Small and Medium Enterprises (“UMK-M”) as well as to the national trade and industry;
  • guarantee every Indonesian citizen a job and fair compensation;
  • implement adjustments to various regulations related to the empowerment to cooperatives, UMK-M as well as to the national trade and industry; and
  • implement adjustments to various regulations relating to the increase of investment ecosystem, ease and acceleration of national strategic projects.

Under Article 4 of Law 11, the scope of Law 11 is as follows:

  • improvement of investment and business activities ecosystems;
  • manpower;
  • the ease, protection, and empowerment of cooperatives and UMK-M;
  • the ease of doing business;
  • research and innovation support;
  • land procurement;
  • economic zone;
  • Central Government investment and acceleration of national strategic projects;
  • implementation of government administration;
  • sanctions.

All business or sectoral licences which were issued prior to the enactment of Law 11 remain valid up to their respective expiry dates.  However, those that were in the application process when Law 11 was enacted will be adjusted with the provisions under Law 11.

Law 11 also mandates that the implementing regulations of Law 11 must be issued at the latest of three months as of the enactment of Law 11.  Further, all implementing regulations from the laws amended by Law 11 will remain valid provided that they do not contradict Law 11 and must be adjusted (where necessary) at the latest of three months as of the enactment of Law 11.

It remains to be seen the impacts that Law 11 will have on investments and job opportunities in general in Indonesia as further implementing regulations will be issued in the upcoming months.

We will continue to monitor this and will provide further updates in due course.


If you have any questions or require any additional information, please contact Agnesya M. Narang and Anggi Yusari of Roosdiono & Partners (a member of ZICO Law).

This alert is for general information only and is not a substitute of legal advice.