Constitutional Court's Ruling Doesn’t Affect Business Optimism
The Constitutional Court’s ruling had a significant impact on business planning and management. Workers’ unions enjoyed more benefits than others.
By
BAMBANG SETIAWAN
·4 minutes read
The public have welcomed the Constitutional Court's ruling on the Job Creation Law. Meanwhile, business players seem to be ambivalent. Even though the court’s decision could harm business activities, business people are optimistic that the government will be able to cope with the legal uncertainty caused by the ruling. The court’s ruling also has not affected business players’ optimism, which began to grow amid a significant decline in new Covid-19 cases from August to December 2021.
Signed by President Joko “Jokowi” Widodo on 2 Nov., 2020, the Job Creation Law must be revised after only a year of implementation. The Constitutional Court's ruling, dated 25 Nov., 2021, held that the passage of the Job Creation Law was procedurally flawed. The court also ruled that the Job Creation Law was conditionally unconstitutional.
A survey conducted by Kompas Research and Development (Litbang) found that 60.9 percent of respondents agreed with the Constitutional Court's ruling that the new law’s passage was procedurally flawed. Meanwhile, another special survey conducted on entrepreneurs showed that business people were split on the court’s ruling. Of the business people surveyed, 51.8 percent agreed while the other 48.2 percent disagreed.
The Constitutional Court’s ruling had a significant impact on business planning and management. Workers’ unions enjoyed more benefits than others. On the other hand, the number of the business people who felt disadvantaged reached 48.2 percent, higher than those who said they benefited from the court’s ruling (21.1 percent). The most affected were entrepreneurs with large scale businesses (66.6 percent).
Remaining optimistic
The Constitutional Court's decision did not dampen the optimism that began to emerge in late 2021. The respondents, both the general public and business people, said they were optimistic about economic and business conditions in 2022. As many as 71.2 percent of the
general public were optimistic. Meanwhile, 84.7 percent of entrepreneurs said they were optimistic as well.
The optimism of the public and entrepreneurs cannot be separated from positive perceptions of a number of indicators. These indicators include the apparent waning of the pandemic, as well as an improvement in business conditions in 2021 from those of 2020, more flexibility in doing business in 2021 and an improvement in the perception of the ease of doing business.
As many as 50.3 percent of the public said the 2021 business situation was better than in 2020, and 17.9 percent said the business condition had remained good.
The apparent decline of the pandemic and the resumption of business activities were the main keys to the improvement in optimism. Because of these two main factors, the business condition in 2021 was better than in 2020. As many as 50.3 percent of the public said the 2021 business situation was better than in 2020, and 17.9 percent said the business condition had remained good.
Meanwhile, among business people, as many as 47.1 percent of the respondents considered the business condition better in 2021, and 27.1 percent said the condition remained good, while the other 16.5 percent said the condition was getting worse.
The flexibility in doing business that began to be felt in 2021 also underlies the optimism for 2022. The public (63.4 percent) said there was flexibility in doing business. A high percentage came from business respondents especially small and micro entrepreneurs (73 percent).
The Constitutional Court's ruling did not affect people's interest in starting a business. Public enthusiasm to start business remained high (79.6 percent) in December 2021. This percentage was close to the 78.5 percent recorded in a similar survey conducted in April 2021. Interest in starting a business occurred in all circles, mostly entrepreneurs. Interestingly, the younger the age, the greater the interest in starting a business. In fact, the age group of 23 years and under was the group that showed most interest in starting a business.
In fact, the percent of entrepreneurs who believed the government would be able to cope with the legal uncertainty was even higher at 80 percent.
Although the Constitutional Court’s ruling was considered controversial, it did not affect the public and business confidence in the government. As many as 58 percent of respondents still believed that government would be able to overcome the uncertainty caused by the court's decision. In fact, the percent of entrepreneurs who believed the government would be able to cope with the legal uncertainty was even higher at 80 percent.
Such a positive response cannot be separated from public appreciation of the attention given by the government to
the business world. The survey showed an increase in public appreciation for the government’s attention. The respondents who said the government paid attention to the business world rose from 57.6 percent in April to 63.2 percent in December. (Kompas Research and Development)
(This article was translated by Hendarsyah Tarmizi)