AmCham Update
AmCham Update #90
Omnibus and Investment, PCR Price, Layoffs, Education Sector
Oct 07, 2020 | AmCham Indonesia

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Omnibus Law on Job Creation: Key Points

The House of Representatives (DPR) ratified the Omnibus Job Creation Bill on Monday, Oct 5. Here are the key points as compiled by Katadata:

Investment 

  • Business fields closed to foreign investment have been reduced from 20 to six.
  • Foreign universities can be established in Special Economic Zones (KEK).
  • Islamic mass organizations and universities to examine the halalness of products, halal fatwa to still be issued by the Indonesian Ulema Council (MUI).
  • Investment requirements in sectoral law will be abolished and transferred to the Presidential Regulation on the Investment Priority List.
  • Integration of fishing boat licenses to be carried out by the Ministry of Marine Affairs and Fisheries (KKP).
  • Agency for the Acceleration of Housing Management established to manage funds for public housing construction.
  • Laws for regulation of forest areas are now government regulations.
  • Violations of community plantation business activities and corporations in forest areas will carry criminal sanctions.

Special Economic Zones (KEK)

  • KEK activities can now include the education and health sectors.
  • Establishment of land bank for agrarian reform, 30 percent of land under management.

Employment

  • Sectoral minimum wage abolished.
  • Job loss guarantee (JKP) for workers who experience termination of employment. Severance pay is set according to the length of time worked by the employee.
  • Flexible working hours for part-time jobs and the digital economy (max eight hours a day or 40 hours per week).
  • No restrictions on scope of work that can be outsourced.
  • Working time for special jobs can go beyond eight hours a day: applies to oil, gas, mining, plantations, agriculture and fisheries.
  • Fixed time work agreements (PKWT) only available for jobs that are time and type-specific. No PKWT held on permanent work.
  • Foreign workers (TKA) must be experts needed for certain conditions.

Ease of Doing Business 

  • Initial capital requirements for PT companies abolished.
  • New pre-investment visit visa guaranteed by deposit.
  • Scope of permanent residence permits expanded for purchase of second home.
  • Village-owned enterprises (BUMDes) are now legal entities.
  • Nuisance permission removed.

Taxation

  • Central government determines national fiscal policy along with rates of regional tax and levies.
  • Abolition of domestic income tax (PPh dividend) (business entities and private persons) invested domestically.
  • Abolition of foreign dividend income tax if invested domestically 
  • Set criteria for VAT (value added tax) on goods and services and sales tax on luxury goods.
  • Interest given for refund of tax overpayment.
  • Tax offence investigations to be ceased upon payment of tax debt.

Business Licensing 

  • Licensing will move to a risk-based process. 
  • Location permits with spatial suitability will be removed.
  • Environmental approvals will be integrated with business permits.
  • Environmental impact analysis (AMDAL) for business activities with a high-risk to the environment.

Research

  • BUMN assigned to research and innovation.
  • Research and Innovation institutions to be established in the regions.

MSMEs and Cooperatives

  • Regulation of ease of doing business, incentives and legal protection of micro, small and medium-sized enterprises (MSMEs).
  • Prioritization of small and medium-sized enterprise (SME) products and services in procurement of government needs.

Regional

  • Regional heads can issue regional bonds to finance infrastructure or public service activities.
  • Refusal of Perda may result in administrative sanctions on local governments.

Related link:


6.4m Workers Laid Off due to Pandemic

The Indonesian Chamber of Commerce and Industry (KADIN) says more than 6.4 million workers have lost their jobs since the COVID-19 pandemic began, due to the tightening effect on the cash flow of businesses.

Business sectors that have laid-off workers:

  • Textiles - 2.1 million people
  • Land transportation - 1.4m
  • Restaurants – 1m
  • Shoes/footwear - 500,000
  • Hotels - 430,000
  • Retail - 400,000
  • Pharmaceuticals - 200,000.

Kadin Deputy Chairman Benny Soetrisno said the income of approximately 82 percent of business actors is under heavy pressure due to the pandemic, but he is optimistic the economy will improve once a vaccine is available to the public.

Related link:


Ministry of Health Sets PCR Test Price Limit

The Ministry of Health has set a price ceiling on PCR tests through Circular Letter HK. 02.02/I/3713/2020 concerning the Limit on the Highest Tariff of Real-Time Polymerase Chain Reaction (RT-PCR) Examination. It was ratified by the Acting Director-General of Health Services Abdul Kadir on Oct 5. The PCR or swab test is considered the most reliable way to detect COVID-19.

Taking service, consumables, reagents, and administrative costs into account, the highest tariff for PCR examinations has been set at Rp 900,000. The highest tariff limit applies to those who carry out RT-PCR tests at their own request and does not apply to contact tracing activities or referral of COVID-19 cases to hospitals.

Related link:


AmCham Cares: 3M

Since the COVID-19 pandemic began, 3M has addressed it from all angles and across all stakeholders, including its community partners around the world.

3M is now providing $20 million globally in financial support to frontline healthcare workers, vulnerable populations disproportionally affected by the virus and medical research initiatives.

3M has teamed up with The United Way Worldwide to support relief projects across the APAC region that are helping the most vulnerable people in society impacted by the pandemic.

In Indonesia, $75,000 has been allocated to the Peduli Pangan Desa Kota food program, providing food for disadvantaged families, which will run until December.


Education Sector Largely Untouched by Omnibus

In its formative stages, the new Omnibus Job Creation Law had promised to undertake education reform and open up the sector to investment by foreign universities, among other changes. In the end, a list of seven laws that were originally intended to be swept away by the Omnibus measure, were not touched.

The seven laws are:

  • Law No 40 Year 1999 on Press
  • Law No 20 Year 2003 on National Education System
  • Law No 14 Year 2005 on Teachers and Lecturer
  • Law No 12 Year 2012 on Higher Education
  • Law No 20 Year 2013 on Medical Education
  • Law No 4 Year 2019 on Midwifery
  • Law No 20 Year 2014 on Standardization and Assessment.

In the Omnibus Law passed this week, the education sector is mentioned in Paragraph 12, article 65 – Education and Culture. The first clause in article 65 says: “The Implementation of licensing in the education sector can be done through business licensing as referred to in this Law.” The second clause states: “Licensing implementation in the education sector will be regulated by a Government Regulation.”

This is different from what appeared to be a promising beginning in earlier drafts, when the government looked to be leaning toward allowing reputable foreign universities to operate in Indonesia. The new Law does say that foreign universities will be allowed to operate in Special Economic Zones, although no details on how this will work are available yet.

AmCham Indonesia has long advocated allowing foreign universities to operate campuses in Indonesia as a way of jump-starting innovation and expertise in the country.

Opening up of the sector will now need to be done through additional regulations.

Related links:


Eddie Van Halen, of Indonesian Descent, Dies After Battle with Cancer

Eddie Van Halen, lead guitarist of the iconic rock band Van Halen, has died at age 65 after a long battle with lung cancer. His death was announced via social media by his son, Wolfgang Van Halen, who described every moment with his father as a gift. Eddie and his brother Alex formed Van Halen after meeting David Lee Roth, and would go on to release more than a dozen albums over four decades, including hits “Hot for Teacher,” “Panama” and the group’s only No. 1, “Jump” in 1984.

On a number of occasions, Eddie claimed to be of Indonesian descent. His father, Jan Van Halen was a musician from the Netherlands, while his mother, Eugenia, was of Dutch-Indonesian descent from Rangkasbitung.

Related Links:


Support Independent Journalism: Subscribe to The Jakarta Post

In these difficult times, our hometown English language newspaper, The Jakarta Post, is more important than ever. Given the difficulties of physical circulation and the economic slump, the Post needs to boost its online subscribers – a goal we heartily support at AmCham Indonesia. Quality English language news is vital for our businesses, our home offices and the flow of information out of Indonesia. It is for this reason, that we are urging all of our members and readers to subscribe to JP! Information is what will help get us through this crisis. Below is information about how to sign up.

JP Premium Digital Subscription Packages

https://www.thejakartapost.com/packages

Monthly subscription – Rp 50,000

Yearly subscription – Rp 600,000


We Still Need Your Support to Shelter the Front Line

AmCham Indonesia and Habitat for Humanity have joined forces in an initiative called Sheltering Those Who Care for Us, a program to provide temporary quarters in hotels for Indonesian medical workers during the COVID-19 pandemic. Our program has helped not only medical workers in Jakarta, but also Tangerang and Surabaya; we are now planning to expand to Sulawesi.

With the COVID-19 pandemic still spreading, medical workers are working a lot harder than before. In these difficult times, they often cannot go back home for fear of infecting family members or being rejected by their local communities. As a result, they are forced to sleep in hospitals without a proper bed, also increasing the possibility of getting infected.

By donating, we will increase the overall capability of Indonesia to treat COVID-19. Habitat will match individual hospitals with hotels on an as-needed basis.

Your support is needed more than ever.

CLICK HERE FOR MORE FLYER ON HOW TO DONATE


Now is the Time to Join AmCham!

Now is the Time to Join AmCham!

We are continuing with a full slate of meetings, events and information offered to our community online. But we can only do this through the support of our members. If you are not yet an AmCham member, please join now!

AmCham Indonesia is open to all companies with an interest in US business relations and we have many non-American members. We are a community and we welcome you!

Reach us at [email protected] or click below!

JOIN AMCHAM

 


AmCham Office and Events

AmCham Office and Events

The AmCham Office is on work from home status and all face-to-face meetings and events have been postponed. We are having a number of meetings online using the Zoom platform. You will be notified of virtual meetings as they are scheduled.

 

 


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What is Your Company Doing on COVID-19?

Please let us know what measures your company may be taking in the form of donations and other assistance to help Indonesia during this time of confusion and concern. Contact [email protected] with your news. We would like to publicize the ways that our AmCham companies are pitching in.


Stay well

We urge you to send us press releases and other information that we can pass on to the broader AmCham community. If you have items of interest, please email material to [email protected]. Follow this link to information provided by the US Embassy

Stay safe, call a doctor if you have a high fever, cough, or difficulty breathing. Stay healthy above all else.


COVID Update is AmCham’s regular newsletter on developments related to the pandemic crisis in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard is the Managing Editor