President: Emergency Law Provides Legal Certainty for Investors
The government would need to accelerate anticipatory measures over the global situation, overshadowed by threats of global recession, rising inflation and stagflation.
Coordinating Minister for the Economy Airlangga Hartarto, Coordinating Minister for Political, Legal and Security Affairs Mahfud MD, and Deputy Minister of Law and Human Rights Edward OS Hiarief announced the lieu of law (perppu) on Job Creation after meeting the President at the Merdeka Palace, Jakarta, Friday (30/12/ 2022)
JAKARTA, KOMPAS — President Joko “Jokowi” Widodo has announced the issuance of emergency law in the form of a Government Regulation in lieu of law (perppu) No. 2/2022 in the hope that it will provide legal certainty for both domestic and foreign investors. It came up following the suspension of Law No. 11/2020 on job creation, which was declared conditionally unconstitutional by the Constitutional Court.
"The situation looks normal. [In fact] threats of global uncertainty are lurking. We know that. I have repeatedly stated it, how many countries have [already] become patients of the IMF: 14. [Another] 28 are queuing at the door of the IMF, also as patients," President Jokowi said. He was speaking in response to media queries following a meeting, in which he announced the lifting of the public-activity restriction (PPKM) implementation at the State Palace in Central Jakarta on Friday (30/12/2022).
President Jokowi conceded the world was in a grim situation. "The threat of risk of uncertainty has prompted us to issue the Perppu. It is to provide legal certainty amid legal vacuum. In the perception of domestic and foreign investors, that is what concerns them most because our economy in 2023 is highly dependent on investment and exports," he said.
The emergency regulation was signed by President Jokowi on Friday in the presence of Coordinating Economic Affairs Minister Airlangga Hartarto; Coordinating Political, Legal and Security Affairs Mahfud MD; and Deputy Law and Human Rights Minister Edward OS Hiariej.
Airlangga said that the government would need to accelerate anticipatory measures over the global situation, overshadowed by threats of global recession, rising inflation and stagflation. He said the grim situation was marked with developing countries beginning to turn to IMF for financial assistance.
The heated geopolitical condition, food, energy and financial crisis as the impact from the Ukraine-Russia ongoing war were reported to be the trigger of the issuance of the emergency regulation.
Law No. 11/2020 concerning job creation was declared formally flawed and conditionally unconstitutional by the Constitutional Court's decision in case number 91/PUU-XVIII/2020. The government was given two years, starting from 25 November 2021, to amend the law. The court suspended the law, ruling that the process for forming Law No. 11/2020 had not been in accordance with the legislation procedures.
RHAMA PURNA JATI
Thousands of students and workers gathered at the Courtyard of the South Sumatra DPRD Office in Palembang, Thursday (8/10/2020). They demanded that the South Sumatra DPRD convey their aspirations against the Job Creation Bill.
The consequences of the court’s decrees are that the government must refrain from policy executions that are strategic in nature and broadly impactful. The government is also not allowed to issue new implementing regulations related to the Job Creation Law (kompas.id, 25/11/2021).
Airlangga said that the Constitutional Court's decision greatly influenced the business world, both at home and with foreign investors, with them being forced to wait for legal certainty to be restored.
"We are in for a budget deficit of less than 3 percent and we will rely on investment [to maintain economic growth]. To provide legal certainty to the business world, the Perppu related to job creation is important," he said.
Several arrangements in the emergency regulation, according to Airlangga, are related to employment, namely minimum wages and workforce outsourcing. It also regulates synchronization with Law No. 7/2021 concerning the harmonization of tax regulations and Law No. 1/2022 concerning financial arrangements between the central government and regional governments, water-resources improvement for public needs, as well as rectifying the typographical errors or article references and non-substantial legal drafting.
Mahfud MD pointed out that the emergency regulation also came up as a compromise with the “conditional unconstitutional” ruling by the Constitutional Court on the Job Creation Law. "Given the urgency, we did not wait for the legislation of a new law, but issued the Perppu because a Perppu is equivalent to a law," he said.
He said the decision to see the current economic situation as urgent, as raised by Airlangga, was the President’s prerogative, which would subject to executive explanation in the legislative process at the next House of Representatives plenary session.
