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Entrepreneurs Hope Omnibus Law Boosts Manufacturing Industry Performance PDF Print E-mail
Written by Maizer   
Thursday, 06 February 2020

Businesspeople hope that the omnibus law can be immediately applied to encourage the performance of the manufacturing industry, which recorded a weakening in the last few years. Omnibus law created by the government employment is the key to hoisting up the growth of the manufacturing industry. The Central Statistics Agency (BPS) noted that the structure of gross domestic product (GDP) when viewed by business sector shows quite alarming conditions.


Last year, the industrial sector was still the main contributor to GDP with a share of 19.7%, but the growth was only 3.8% or lower than the 2018 rate of 4.27%. The second biggest role in GDP was the trade sector by 13.01% with growth of 4.62%, agriculture 12.72% (growing 3.64%), construction contributed 10.75% (growing 5.76%), and mining with share of 7.26% (1.22% growth) The three sectors that had the highest growth in 2019 were other services at 10.55%, company services 10.25%, and information and communication which grew 9.41%.


Meanwhile, the government said there were 81 laws (Laws) and 1,240 articles had been identified and would be simplified through the omnibus law method, namely the formation of a law that changed the various provisions stipulated in various other laws.


Of the two Draft Omnibus Laws that were prepared, the new government submitted the draft Tax Omnibus Law to the DPR. Whereas one more draft bill, namely the Employment Copyright Omnibus Bill, has not been submitted to the DPR. Chairperson of the Indonesian Chamber of Commerce and Industry (Kadin) Rosan P Roeslani said, the weakening of the performance of the processing industry was caused by weakening investment.


In fact, many manufacturing industries require investment, such as the textile industry and textile products (TPT). Throughout 2019, BPS data showed the formation of gross fixed capital (PMTB) or investment of 4.06% yoy or weakened compared to the previous year which was 6.01%. In addition, according to Rosan, demand for products from the processing industry is also declining. To hoist more growth in the manufacturing industry, the government needs to make improvements both from fiscal policy, monetary policy and structural reform.


"That's all it has to do to make our domestic industry increase. Both in terms of HR (human resources) for human productivity, then from the harmonization of policies. So indeed there are a lot of homework, "said Rosan when met after Apindo Business Gathering with the theme" Economic Outlook and Fiscal Policy in 2020 "in a series of events celebrating the 68th anniversary of the Indonesian Employers Association (Apindo), which was attended by Kadin Indonesia and the Indonesian Young Entrepreneurs Association (Hipmi) at the Grand Indonesia Hotel Kempinski Ballroom, Jakarta.


Rosan acknowledged that the contribution of the manufacturing industry to the economy had declined. In the past, said Rosan, Indonesia's manufacturing industry could contribute to gross domestic product (GDP) to 29%. Last year, BPS recorded that the contribution of the manufacturing industry to the national economy was only 19.7%. He also hopes that the government's focus on the five prioritized industrial sectors can also be a hoist in the growth of the manufacturing industry. The five industrial sectors are the food and beverage (mamin), textile and clothing, automotive, electronics and chemical industries industries.


"In addition, the omnibus law creation of employment created by the government is also expected to make the manufacturing industry grow higher," he said.


Similarly, Deputy Chairperson of the Indonesian Employers' Association (Apindo) Suryadi Sasmita also hoped that the omnibus law could be implemented immediately. According to him, the employment omnibus law is the key to hoisting up the growth of the manufacturing industry.


Not only published in the form of laws, these regulations must also be immediately issued in the form of government regulations (PP) and ministerial regulations (candy), and unlike other laws whose derivative regulations tend to be issued longer. Suryadi explained, manufacturing industry growth slowed partly due to the low productivity of domestic human resources.


According to him, with minimum wages that are more or less the same as Indonesia, Vietnamese human resources can be more productive. "Here (Indonesia) there are so many (which burden employers), then layoffs, then BPJS. There are too many extra partners. If the layoffs are shared evenly, it is also high. So if we say that our manufacturing here we are unable to compete, one of them is because of productivity, "said Suryadi. In addition, licensing in Indonesia is also too complicated.


He gave an example, in Indonesia, entrepreneurs who will build malls need more than 50 licenses. Every mall needs, such as elevators, escalators, and gen sets, require their respective permits. This is different from abroad.


"There is nothing like that abroad. Building a mall is a permit. "Here, we can get up to 50 permits, that's a high cost," he added. He also mentioned, manufacturing entrepreneurs are still being asked to extend licenses, every two or five years.


In fact, the manufacturing industry should be given a permit to operate for up to 20 years, and it is not necessary to extend licenses every two or five years. "Extension of licensing is not necessary, unless the entrepreneur wants to change business lines, such as from garments to households. That's a new permit. So we continue to extend the permit, yes that's high cost, "he said.


Furthermore, he said, there are laws and ministerial regulations that can be defeated by regional regulations. Indeed there are laws related to regional autonomy, but in their implementation, regional regulations are sometimes not in line with regulations issued by the central government. This also makes entrepreneurs confused in running their businesses.


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