The so-called Indonesian Omnibus Law (Job Creation Law) has finally arrived after many months in the making, notwithstanding considerable controversy. By approving the Omnibus Law, the DPR has passed one of the most significant and diverse laws in Indonesia’s history. The informal title “omnibus” refers to the Latin word of the same name, which translates to “for all”, which is fitting as the Omnibus Law simultaneously impacts almost 80 different laws. Although it is a quite an ambitious piece of umbrella legislation, the government still has much work to draft and pass the many implementing regulations contemplated throughout the Omnibus Law. Without the implementing regulations, there is considerable speculation as to the practical implementation of the myriad changes set out for so many laws.
The official objective of the Omnibus Law is to boost domestic growth and investment, mainly by “simplifying” and removing various steps and procedures that were involved in obtaining business licences, streamlining inter-government bureaucracy, making industrial relations matters more employer-friendly and creating more jobs along the way.
Following the DPR’s approval of the Omnibus Law on 5 October 2020, President Jokowi stated several reasons for the necessity of such a complex piece of legislature: to provide as many jobs as possible for job seekers and the unemployed, particularly in light of the monumentally negative impact of the COVID-19 pandemic on the Indonesian economy; to cut red tape in the business sector; to support efforts in preventing and eradicating corruption by eliminating illegal levies through an integrated electronic licensing system; and to standardize service levels provided by local government. He also appears to be acutely aware that the Omnibus Law requires a hefty number of implementing regulations, in the form of Government Regulations, Presidential Regulations an other regulations, that the government is obliged to complete (somewhat optimistically) by no later than three months after the Omnibus Law has been promulgated.
The Omnibus Law is over 800 pages long, contains 186 articles, each of which amends multiple provisions of the various laws, consists of 15 Chapters which amend 76 laws and revoke two laws, laying down the foundation for many implementing regulations that will need to be drafted and passed before such amended laws are practically operative.
We highlight below a few chapters we believe are likely to be of particular interest, and further below we set out a comprehensive map of the Omnibus Law to illustrate the extreme breadth of its subjects and the laws that are covered (to a greater or lesser extent).
The Omnibus Law is the beginning of a long journey that will involve the production and streamlining of many implementing regulations. There are media reports of challenges to the Omnibus Law’s legal validity, so it may be subject to judicial review, which, if successful, could cancel any gains made by the Omnibus Law. Once the final Omnibus Law has been published, we will need to check and confirm any changes from the 13 October version that was widely informally circulated at the time of preparing this Client Update. Following the Omnibus Law’s publication, businesses would be well-advised to start reading a consolidated version of each amended law relevant to their business sector in order to become more familiar with the changes, and the anticipated implementing regulations.
For any business permits or licences impacted by the Omnibus Law that are currently in the process of being submitted, you should expect delays, as such permits must be adjusted to the Omnibus Law. This process is likely to take considerable time because regulators will be unlikely to act until the relevant implementing regulations are already in place. We are monitoring the release of not only the final Omnibus Law, but any future government, presidential or other regulations that will eventually further regulate the Omnibus Law, and are preparing further Client Updates on various key business sectors impacted by the Omnibus Law.
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