Court Ruling on Job Creation Law May Affect Investment Sector: Economist

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Markus Wisnu Murti

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  • The situation of the verdict hearing of the Job Creation Law at the Constitutional Court in Jakarta, November 25, 2021. TEMPO/Muhammad Hidayat

    The situation of the verdict hearing of the Job Creation Law at the Constitutional Court in Jakarta, November 25, 2021. TEMPO/Muhammad Hidayat

    TEMPO.CO, JakartaCenter of Economic and Law Studies (Celios) director Bhima Yudhistira opined the Constitutional Court (MK) ruling that describes the Job Creation Law as conditionally unconstitutional could bring a significant impact to the business and investment sector.

    According to Bhima, some business actors were hesitant to expand their businesses as they were waiting for the certainty of the derivative rules of the omnibus law, for example, related to wage standards and risk-based permits. If the legal umbrella has to be revised, they are worried that the derivative rules also need to be changed.

    “This will delay investment and make Indonesia's status to be the country with the most policy uncertainty,” said Bhima to Tempo on Friday, November 26.

    In the 2021 Global Complexity Index, the economist said, Indonesia is ranked 6th out of 77 countries that have high regulatory complexity. The cost of doing business in Indonesia, he went on, will increase when there are fluctuating and complicated regulations.

    “Business players must recalculate all their expansion plans in 2022, especially those in the labor-intensive sector,” Bhima added.

    The Constitutional Court on Thursday, November 25 ordered the government to amend the Job Creation Law or Law No. 11 of 2020 within the next two years as it contradicts the 1945 Constitution. The court also described it as conditionally unconstitutional.

    Read: Govt Urged to Respect MK Verdict on Job Creation Law

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