We prepare this newsletter by referring to the latest script of UU Cipta Kerja circulating in public consisting of 812 pages.

UU CIPTA KERJA IN GENERAL

President of Republic Indonesia (“President”) submitted the Omnibus Bill on Job Creation (RUU Cipta Kerja) to the Indonesia’s House of Representative (“DPR”) which has then passed by DPR on October 5^th, 2020. Even though it has been passed on October 5^th, 2020, UU Cipta Kerja has not taken into effect yet until it is signed by the President and stated in the State Gazette of the Republic of Indonesia. By law, the President is given 30 days as of it was passed by DPR to sign UU Cipta Kerja. Lapse of this 30 days period, UU Cipta Kerja shall automatically be taken into force at any time.

UU Cipta Kerja consist of 15 chapters and 186 articles. It has amended about 78 Laws. The main goals of UU Cipta Kerja are to improve the ease of doing business, to attract foreign investment in Indonesia and to broaden job opportunities. By any measure, UU Cipta Kerja is an ambitious project yet sophisticated, which consequently requires the Government of Indonesia undertakes harmonization process of hundreds current implementing regulations.

The forming process of UU Cipta Kerja per se is full of pros and contras. Some parties responded that the formation of this UU Cipta Kerja has lacks of transparency and accountability principles while on the other hand the Government of Indonesia claims that the formation process can be easily followed from time to time, either in media or in certain Government institutions’ official websites.

THE MAIN SUBJECTS  

UU Cipta Kerja encompasses matters, as follows:

1. Enhancement of investment and business activity ecosystem;
2. Employment;
3. Ease, protection, and empowerment for cooperatives and micro, small and middle business entity;
4. Ease of doing business;
5. Research and innovation support;
6. Land acquisition;
7. Economic area;
8. Central government investment and strategic nasional project acceleration;
9. The implementation of government administration; and
10. Imposition of sanction.

OBJECTIVES OF UU CIPTA KERJA 

The main purpose of UU Cipta Kerja is to improve the ease of doing business ecosystem which is expected to stimulate the investment in Indonesia resulting systemic economic growth. It is possible to achieve the expected investment climate if it is carried out by simplifying licensing process, synchronizing the unsynchonized regulations, and revoking the overlapping regulations.

With the increment of the quantity and quality of the investment through the implementation of this UU Cipta Kerja, the Government of Indonesia expects it could be followed with the expansion of job opportunities which could implicate the decrease of unemployment rate.

Strengthening and protecting cooperatives, and micro, small and middle business entity (“UMKM”) is also the objective of UU Cipta Kerja as a proof of the Government of Indonesia giving its full supports to the national industry. The Government of Indonesia has acknowledged that UMKM contributes very significant role to the sustainability of the economy in this country especially during the economic crisis. This UU Cipta Kerja encourages the business players to cooperate with micro and small business entities in return of certain incentives and/or facilities.

LAW ENFORCEMENT

Chapter XII UU Cipta Kerja places the Central Government as the holder of key role in monitoring and supervising the business activities carried out by the permit/licence holders. This role can be delegated by the Central Government to the Regional Government. In performing the above monitoring and supervising role, the Government of Indonesia may be assisted by certified professionals relevant to each business sector.

UU Cipta Kerja introduces administrative sanction for those misconducts which have not been regulated in previous regulations. While for criminal sanction, UU Cipta Kerja emphasizes the implementation of criminal sanction as ultimum remedium not only to person, but also to corporation.

Administration sanction will be imposed to permit/license holders who do not comply with the provisions stipulated in their permit/license. This administration sanction comprises of warning, temporary suspension of business operation, monetary sanction, coercive measure for business closure, cancelation of licensing or certification, and revocation of permit/license.

LONG WAY TO GO 

UU Cipta Kerja mandates that the implementing regulations in the form of Government Regulation or Presidential Regulation shall be enacted within 3 months as of  UU Cipta Kerja is taken into force. At least 35 Government Regulations and 11 Presidential Regulations shall be prepared by the Government of Indonesia. These implementing regulations are the key in ensuring UU Cipta Kerja will be implemented effectively.

Further, as a vital platform to implement ease of doing business, the Government of Indonesia shall also ensure that the On-line Single Submission system must be connected seamlessly with the new released Indonesia Standard Industrial Classification (KBLI). In short, all on-line systems supporting the implementation of this UU Cipta Kerja must also be ready to be used by investors at the time UU Cipta Kerja is effective.

This newsletter is for informational purposes only and solely intended to provide general information and should not be treated as legal advice, nor shall it be relied upon by any circumstance or create any relationship. All summaries of the laws, regulation and practice in the contents are subject to change. Specific legal advice should be sought by interested parties to address their particular circumstances.

If you have any question and/or wish to discuss further about the above or to discuss the impact of these legal and commercial developments in your particular case, please reach out to Cylvie at cylvie@sapartnerslaw.com and/or Sunu at sunu@sapartnerslaw.com