As of October 5th 2020, the Omnibus Law RUU Cipta Kerja was officially inaugurated at The House of Representative of The Republic Indonesia plenary meeting. The bill was aimed to improve Indonesia’s economic welfare as the government plans to shift the country into becoming an economic powerhouse by 2045. The Omnibus Law consists of 11 clusters, namely licensing simplification; investment requirements; employment, facilities, empowerment, and protection of Micro, Small, and Medium Enterprises (MSMEs); Ease of Doing Business (EoDB); research and innovation support; government administration; provision of penalty; the land acquisition; government investment and projects; economic zone as well as an industrial area. Due to this action, investors, both domestic and foreign, have easier access from simplified laws and consequently, IHSG was hauled to the green zone on the following day. However, despite the IHSG strengthening, the bill has brought upon public backlash and dissatisfaction for the citizens. The bill has brought upon dissatisfaction to the citizens, to the point of public backlash as plenty believe that the People’s Representative Council goes against its self-explanatory name of representing the people. Legions of citizens also believe that workforce population is unfavored as the massive transformation has them worrying about their future.
After the Parlement signed the bill, Government through Coordinating Ministry for Economic Affairs, Airlangga Hartanto, claimed that JKP (Jaminan Kehilangan Pekerjaan) will be the responsibility of BPJS Ketenagakerjaan which will be reinforced by the government. In Addition, on Sunday (04/10), Airlangga Hartanto stated that "The Job Creation Bill will encourage regulatory reform and debureaucratization, so that government services will be more efficient, easy, and certain, with the application of Norms, Standards, Procedures and Criteria (NSPK) and the use of electronic systems". On the other hand, Airlangga said that this bill will also accommodate small unit business in terms of establishment permit. From the tax side, the government exempts the Hajj Financial Management Agency (BPKH), social institutions and religious institutions from income tax (PPh). In addition, the government also eliminates income tax on dividends from local business entities invested in the country and dividends income tax for foreign companies invested domestically. The Government will also keep providing severance pay and paid leave. In the case of layoffs, will be negotiated by both parties. Still, the law's ratification sparked protests. The labor union strongly opposes the Omnibus Law on Cipta Kerja because it is considered to have eroded workers' welfare. In response to this, the workers will hold a national strike which will be carried out in the Jakarta area to urge the annulment of this law. Although it is likely that the government cannot refuse for this sake, it still calls on demonstrators to understand the conditions and comply with health protocols.
Viewing from the lens of the capital market perspective, the ratification of the RUU Cipta Kerja brought upon various response and sentiments toward the nation’s market. On Tuesday (6/10), The People's Consultative Assembly of the Republic of Indonesia (MPR) Deputy Speaker, Syarief Hasan of the Democratic fraction, said that not only citizens and workers opposed the RUU Cipta Kerja, but investors from around the world also expressed their concern. As many as 35 investors manage funds of up to US $ 4.1 trillion. Inside, there are investment institutions Aviva Investors, Robeco, Legal & General Investment Management, the Church of England Pensions Board, and Sumitomo Mitsui Trust Asset Management. "Although global investors have refused, the government has always acted on behalf of investors to pass the RUU Cipta Kerja. So, who UU Cipta Kerja intended for?" Syarief stated on Wednesday (10/7). Nevertheless, JCI's performance says otherwise. JCI closed up 0.65% on Monday (10/5) at 4,958.76, with 224 stocks rising and 175 stocks stagnant. The JCI also managed to gain 0.82% to the level of 4,999 on Tuesday. Following the rise in JCI's performance, market players still think that the omnibus law has not significantly impacted the benchmark index. This statement is reflected in the JCI movement, which has gradually moved to the psychological level of 4,900-5,000. Besides, foreign investors exit the regular market with a staggering value of Rp 346.95 billion. With that being said, in this particular time, countless activities in the nation or international-wide have become the sentiment of Indonesia's capital market movement.
Sources:
BBC Indonesia
CNN Indonesia
CNBC Indonesia
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