Dear Readers,
PRIME Consultancy would like to give you regularly updates about the so-called omnibus law that shall be upcoming soonest in 2020. This bill was first announced December last year and aims to overrule various regulations concerning different topics. After several failed attempts, a draft bill has been submitted to the House of Representatives on 12 February. Here are some of the recent developments on the bill that could significantly change the business climate in Indonesia:
- The draft is 1028 pages long containing 1200 articles covering 11 topics, with the main topics being job creation, taxation and SMEs. It shall be replacing in one go dozens of other laws with thousands of implementation regulations that are all together seen as the root of the immense bureaucracy hampering an upswing to the other Asian tigers.
- Purpose is to achieve ease of doing business and create more jobs, amid slowing economic growth and uncertainties from international factors like the trade war and most recently also the coronavirus outbreak which could threaten Indonesia’s economic growth targets.
- Businesses have welcomed the bill as it promises simplification of permit applications and investment requirements. Expats would no longer require work permits for becoming a director in Indonesia and they would no more have to declare their taxes based on their world income.
- Most unions are fiercely fighting this bill because it is causing controversy as it is deemed to benefit more for businesses than workers. Changes proposed for workers include cuts in severance pay, reduced holidays and maternity leave.
- Plenty of licenses shall be scrapped that make business developments hard and lengthy too. In addition to that, environmental impact assessments (AMDAL) would no longer be required by all companies and only affects those who are causing significant impact to the environment.
President Jokowi aims to have the bill ratified by the House of Representatives by mid 2020, but it is possible that it could go several months longer. Therefore we will keep you posted as major changes could be coming.
If you have any questions, feel free to reach out to us.
Best regards,
Jochen Sautter.
