Long-Awaited Omnibus Law Finally Enacted

November 5, 2020

On November 2, 2020, the Job Creation Law or what is publicly known as the Omnibus Law was officially promulgated as Law No. 11 of 2020 on Job Creation (“Job Creation Law” or “Omnibus Law”). This newsflash is an update to the previously issued newsflash that we issued on October 7, 2020 (link here).

In line with the previous Job Creation Bill that was approved by the House of Representatives and circulated publicly on October 5, 2020 (the “Job Creation Bill”), it seems that there are no major changes to the Job Creation Bill compared to this final version of the enacted Omnibus Law, which amends 78 existing laws.

We will issue a series of newsflashes with an in-depth discussion of the Omnibus Law notable amendments against the previously prevailing laws and other notable changes against the Job Creation Bill (as relevant) within the upcoming weeks.

The Omnibus Law aims to create and increase jobs by providing the protection and empowerment of cooperatives and UMKM as well as providing ease of doing business, particularly for the acceleration of national strategic projects.

The Omnibus Law consists of 15 chapters and 186 articles which includes the following scopes:

improvement of the investment ecosystem and business activities;
manpower;
protection and empowerment of cooperatives and UMKM;
ease of doing business;
research and innovation support;
land procurement;
economic area;
Central Government investment and acceleration of national strategic projects;
implementation of the government administration; and
sanctions

Due to the wide scope of the Omnibus Law, this newsflash will focus on the following key provisions.

Improvement of the Investment Ecosystem and Business Activities

Article 6 of the Omnibus Law introduces a new concept on the improvement of the investment ecosystem and business activities, which will be elaborated below.

- Implementation of Risk-based Business Licensing

The Omnibus Law introduces a new segmentation of business licensing based on risk profiles of the business, namely: low, medium, or high risks.

- Simplification of the Basic Requirement for Business Licensing

The simplification of the basic requirement of business licensing covers the suitability of spatial layout activities, environmental approvals, and approvals of the buildings and certificate of feasible function.

In order to simplify the basic requirement of business licensing, the Omnibus Law amends, removes, and/or stipulates new provisions to the laws related to spatial layout, management of shorelines and small islands, marine affairs, geospatial information, environmental, buildings, and architects.

- Simplification of Sectoral Business Licensing

The Omnibus Law is expected to simplify business licensing process in the following sector: marine and fisheries; agriculture; forestry; energy and mineral resources; nuclear affairs; industry affairs; trade affairs, legal verification (metrology), halal products warranty, and standardizations compliance evaluations; public works and housing; transportation; health, medicine, and food; education and culture; tourism; religion affairs; postal, telecommunications, and broadcasting affairs; and defense and security.

- Simplification of Investment Requirement for Certain Sectoral

In order to implement ease of doing business for public and business actors in certain business sectors, the Omnibus Law amends, removes, or stipulates new provisions to the laws related to capital investment, banking, and sharia banking.

Ease of Doing Business

In order to implement ease of doing business for business actors, the Omnibus Law amends, removes, or stipulates new provisions, among others, under the Immigration Affairs Law, the Patent Law, the Trademark Law, the Company Law, the Taxation Laws, and the Anti-Trust Law.

Central Government Investment and Ease of National Strategic Projects

The Omnibus Law introduces a new concept of the Central Government Investment. The Central Government investment is carried out by the Minister of Finance as the State Treasurer (“MOF”) and/or an institution granted with special authority (sui generis) to manage the investment, in order to increase the investment and strengthen the economic condition for supporting the strategic policies of job creation.

In carrying out its duties, the MOF has the following authorities: (i) fund placement in the form of monies instrument(s); (ii) management of assets; (iii) cooperation with other party including with trust fund; (iv) determine the investment partner(s); (v) grant and obtain loan; and/or (vi) management of its own assets.

On a separate note, the Central Government or the Local Government in accordance with their authorities is responsible to provide area and business licensing for national strategic projects of the Central Government, Local Government, State-Owned Enterprises or Local-Owned Enterprises.

If the Central Government or the Local Government is not able to conduct a land procurement for any national strategic project, then such land procurement may be carried out by business entities subject to requirements under prevailing laws and regulations.

Other Notable Notes

Upon the enactment of the Omnibus Law:

- Any applicable laws and regulations that contradict the Omnibus Law or any other higher laws and regulations or court decisions need to be harmonized and synchronized. It will be coordinated by the Ministry of Law and Human Rights.
- Business or sectoral licensing that has been issued shall remain valid up until the expiry of such licensing. Meanwhile, the ongoing application for a business licensing must be adjusted to be in accordance with the Omnibus Law.
- The relevant Government Regulation(s) and the Presidential Regulation(s) as the implementation of the Omnibus Law shall be enacted within 3 (three) months.

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November 5, 2020