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Omnibus Law – Opening the Indonesian Market to foreign Investors

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Since it was first announced in the city of Wuhan, China, the spread of the corona virus or COVID-19 has become a global phenomenon that has greatly affected the Chinese economy in particular and other countries in general, one of which is Indonesia, which is one of the largest commodity exporting countries to China. .

According to Josua, Chief Economist of Bank Permata, Josua Pardede on Tuesday (3/3/2020), the impact of the decreasing activity of China's manufacturing industry is of course very influential on the Indonesian economy.

From the trade sector, this situation certainly has the potential to reduce demand for Indonesian commodity exports to China. Just a note, currently almost 17 percent of Indonesia's exports go to China.

"Every 1 percent of China's economic slowdown affects Indonesia's economic slowdown by 0.3 percent," he said.

Then, from the investment sector, it can be seen from the current turmoil in the financial market which tends to be restrained.

"Just like other countries, currently, the Government of Indonesia has issued a policy in terms of anticipating the negative impacts of COVID-19. One of the policies is to provide incentives for the tourism sector. Then, for the housing sector, especially for the lower middle class, the policy is to lower interest rates so as to increase supply for housing and others, "he said.

"Bank Indonesia responded by issuing various policies, the conclusion of which was to maintain the rupiah value in order to remain stable on the global market. These anticipatory steps are expected to be able to minimize the negative impact of COVID-19 on the Indonesian economy. "Indeed, the effects of this Coronavirus cannot be overcome, but we hope that this situation can be recovered soon, both China and Indonesia and other countries," continued Josua.

Regarding the government's Omnibus Law draft, Josua believes that this step is an ideal step that can boost Indonesia's economy, one of which is from an investment perspective, where through the current government's Omnibus Law, all forms of regulations that hinder or complicate investment will be facilitated.

"This is a form of government response, which we know last year due to the impact of the trade war, a lot of investment from China, especially the industrial sector, was relocated to Vietnam, so steps are needed to boost the investment rush in Indonesia," he explained.

One of the reasons for reduced investment is the many overlapping regulations in Indonesia that make foreign investors reluctant to invest because they feel very inefficient and difficult.

"So, this Omnibus Law is very good because of the 74 overlapping regulations it will be trimmed into one legal umbrella. This step is certainly an added value for foreign investors to re-invest because in addition to simplifying the process, it also reduces the licensing fees, "said Josua.

"If investment is encouraged and developed, this will have an impact on building our manufacturing industry sectors, which are said to be running in place. If our manufacturing industry is not strengthened, we will continue to rely on imports. Not only the manufacturing industry, other sectors also need to increase their productivity, which can be done by increasing investment, ”concluded Josua.

The pressure for the "Cipta Kerja" Bill to be passed into law continued to flow. The reason is that the omnibus law is the government's breakthrough in cutting bureaucracy, besides that the "Cipta Kerja" Bill is believed to be able to encourage investment and create employment opportunities.

An observer from the University of North Sumatra (USU) Wahyu Ario Pratomo said, the Omnibus Law Bill on "Cipta Kerja" must be seen clearly in its impact. He assessed that the bill has many positive impacts on the Indonesian economy.

According to Wahyu, the "Cipta Kerja" Omnibus Law Bill can boost economic growth, which is currently stagnant. He revealed that the economy was stagnant due to the influence of the spread of Covid-19 or the corona virus.

Regarding this matter, Wahyu sees that the existence of the regulation is in principle positive to encourage investment. Later, this investment will open up jobs that are currently needed by the Indonesian people.