Legal Literacy - This article discusses how the Job Creation Law provides business licensing facilities in Indonesia.
Introduction
The Job Creation Law is present to streamline bureaucracy, increase investment, create jobs, and encourage Indonesian economic growth. With the ease of business licensing and deregulation, this Law aims to reduce obstacles that often hinder economic progress and impede investment from both domestic and foreign sources.
In addition, the Job Creation Law also aims to increase Indonesia's competitiveness at the global level by attracting investment to strategic sectors and encouraging innovation and increased productivity.
In The Job Creation Law, the concept of "clusters" refers to the grouping or division of various economic sectors into related groups or clusters. The main objective of forming these clusters is to facilitate integration, collaboration, and synergy between various parties involved in certain economic sectors.
Clusters in the Job Creation Law reflect efforts to strengthen the integration of economic sectors, encourage collaboration between business actors, and increase efficiency in the use of resources. This is one strategy to create a more dynamic and competitive business environment in supporting sustainable economic growth in Indonesia.
Business Licensing Facilities
The Job Creation Law provides various business licensing facilities for business actors in Indonesia with various changes in regulations and licensing processes.
The Job Creation Law, which came into effect in 2023, is designed to stimulate the growth of the investment ecosystem and business licensing activities in Indonesia. One of the most striking aspects of this Law is the ease of business licensing through regulatory simplification which aims to increase the attractiveness of domestic and foreign investment. These measures are expected to provide a stimulus for economic growth and create more jobs.
The ease of business licensing is carried out through:
First, the Job Creation Law creates a more flexible framework for investors by providing business licensing facilities. This reduces excessive bureaucracy and eliminates administrative barriers that often hinder the investment process. Thus, this increases Indonesia's attractiveness as an investment destination.
Second, this Law integrates various regulations related to investment and business licensing activities into a single legal umbrella. This provides legal clarity for investors, reduces uncertainty, and accelerates the investment decision-making process. Thus, business actors can plan and run their operations more efficiently.
Third, the adoption of digital technology and the provision of online services under the Job Creation Law also support the improvement of the investment ecosystem. This allows the licensing and administration processes to be faster and more efficient, increasing convenience and accessibility for business actors, especially for those operating in areas far from administrative centers.
Fourth, this Law regulates tax incentives and facilities for investors, including business licensing facilities for import and export, which aim to attract investment to strategic sectors and increase the competitiveness of domestic industries. With these incentives, investors are expected to be more motivated to invest their capital in Indonesia.
Fifth, through the Job Creation Law, the government is also committed to strengthening the protection of intellectual property rights and supporting innovation. This is important to encourage investment in research and development, as well as build a more innovative and value-added business ecosystem.
Finally, the Job Creation Law also pays special attention to improving the quality of human resources through various training and vocational education programs. By having a qualified workforce, Indonesia can increase its competitiveness in the global market and attract even greater investment.
Article 6 of the Job Creation Law explains that the improvement of the investment ecosystem and business activities as referred to in Article 4 letter a includes:
- application of risk-based Business Licensing;
- simplification of basic requirements for Business Licensing;
- simplification of sectoral Business Licensing; and
- simplification of investment requirements.
Application of Risk-Based Business Licensing
- The business activity licensing process is changed from permit-based to risk-based.
- Regulated in Article 7 - Article 12 of the Job Creation Law.
- Government Regulation (PP) Number 5 of 2021 concerning the Implementation of Risk-Based Business Licensing.
Simplification of Basic Requirements for Business Licensing
- Integrates and simplifies a number of laws governing basic licensing (Article 13 - Article 25 of the Job Creation Law).
- Location Permit: 4 Laws, 51 Articles. Regarding location permits, it regulates the use of digital RDTR maps; Integration of Spatial Planning & Zoning Plans; One Map Policy to address land overlaps; Review of RTRW to respond to development dynamics; Forest areas are integrated into the RTRW; Acceleration of RDTR determination.
- Environmental Permit: 2 Laws, 36 Articles. Regarding environmental permits, it regulates the maintenance of environmental permits; Environmental standards for medium-risk activities; AMDAL is prepared by certified professionals; AMDAL for high-risk activities; AMDAL is evaluated by the government/certified professionals.
- Building Construction Permit: 2 Laws, 48 Articles. Regarding building construction permits, it regulates the maintenance of building construction permits; Application of technical standards for buildings; Buildings that are not high-risk can refer to prototypes; High-risk buildings must be approved by the government; Certificate of eligibility for function is issued by Construction Management/Supervisor.
Sectoral Business Licensing
- Simplifies and integrates sectoral permits from dozens of laws and articles related to many sectors and causing sectoral ego. 46 Laws, 647 Articles.
- Regarding the simplification of sectoral business licensing, it regulates that the licensing process is risk-based, not permit-based; high-risk activities require permits; high-risk activities have an impact on health, safety, the environment, and natural resource management; medium-risk activities use standards; low-risk activities only need to register; standard assessment by certified professionals; the government oversees high-risk activities.
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