Legal Update

LAW NUMBER 11 OF 2020 ON

JOB CREATION

OVERVIEW, LIST OF AMENDED LAWS

AND NEW FEATURES

CHAPTER 1
GENERAL OVERVIEW

A. Background

Since elected as president of Republic of Indonesia for the second term, President Joko Widodo had
announced to public related to his plan to simplify laws and regulations in Indonesia by issued an
omnibus law. Purpose of the government is to make easier to do business and create more jobs
opportunity for Indonesian people.

On 5 October 2020, the Indonesian House of Representative has approved the draft of the omnibus
law to be applied as a positive law in Indonesia. Series of demonstration was held by labour union and
government opposition political parties to show their disagreement to the omnibus law.

Despite all the protests, on 2 November 2020, the omnibus law officially enforceable with the title
Law number 11 of 2020 on Job Creation (the “Omnibus Law”).

B. Anatomy

The Omnibus Law spreads in 1187 pages, it has 15 chapters and 186 articles as follows:

CHAPTER TITLE ARTICLE

I Definition 1

Principles, Objectives, and

II 2-5
Scope

Improving Investment
III Ecosystems and Business 6-79
Activities

IV Manpower 80-84

Easiness, Protection, and

Empowerment of
V 85-104
Cooperatives, Micro, Small,
and Medium Business
 VI Ease of Business 105-118

Research and Innovation

VII 119-121
Support

VIII Land Acquisition 122-147

IX Economic Zones 148-153

Government Investment and

X Ease of National Strategic 154-173
Project

Implementation of
XI Government Administration 174-176
for Supporting Job Creation

XII Supervision and Development 177-179

XIII Miscellaneous Provision 180-183

XIV Transitional Provision 184

XV Closing Provision 185-186

C. Implementing Regulations

Article 185 of the Omnibus Law states all implementing regulations of the Omnibus Law shall be issued
within 3 (three) months since 2 November 2020 or before 2 February 2021.
 CHAPTER 2
LIST OF THE AMENDED AND REPEALED LAWS

A. The Amended Laws

NO TITLE

1. Law number 26 of 2007 concerning Spatial Management

2. Law number 27 of 2007 as amended by Law number 1 of 2014 On Management of
Coastal Zone and Small Islands.
3. Law number 32 of 2014 about Sea
4. Law number 4 of 2011 on Geo Spatial Information
5. Law number 32 of 2009 on Environmental Protection and Management
6. Law number 28 of 2002 on Buildings
7. Law number 6 of 2017 on Architect
8. Law number 31 of 2004 as amended by Law number 45 of 2009 on Fisheries
9. Law number 39 of 2014 on Plantations
10. Law number 29 of 2000 on Plant Variety Protection
11. Law number 22 of 2019 on Sustainable Agricultural System
12. Law number 19 of 2013 on Protection and Empowerment of the Farmers
13. Law number 13 of 2010 on Horticulture
14. Law number 18 of 2009 on Husbandry and Animal Health
15. Law number 41 of 1999 as amended by Law number 19 of 2004 on Forestry
16. Law number 18 of 2013 on the prevention and eradication of Forest Destruction
17. Law number 4 of 2009 as amended by Law number 3 of 2020 on Mineral and Coal
Mining
18 Law number 22 of 2001 on Petroleum and Natural Gas
19 Law number 21 of 2014 on Geothermal
20 Law number 30 of 2009 on Electricity
21 Law number 10 of 1997 on Nuclear Energy
22 Law number 3 of 2014 on Industrial Affairs
23 Law number 7 of 2014 on Trade
24 Law number 2 of 1981 on Legal Metrology
25 Law number 33 of 2014 on Halal Product Assurance
26 Law number 1 of 2011 on Housing and Resettlement Area
27 Law number 20 of 2011 on Condominiums
28 Law number 2 of 2017 on Construction Service
29 Law number 17 of 2019 on Water Resources
30 Law number 22 of 2009 on Road Traffic
31 Law number 23 of 2007 on Train
32 Law number 17 of 2008 on Shipping
33 Law number 1 of 2009 on Aviation
34 Law number 36 of 2009 on Health
35 Law number 44 of 2009 on Hospital
36 Law number 5 of 1997 on Psychotropic Substances
37 Law number 35 of 2009 on Narcotics
NO TITLE

38 Law number 18 of 2012 on Foods

39 Law number 33 of 2009 concerning Films
40 Law number 10 of 2009 on Tourism
41 Law number 8 of 2019 on the Management of Hajj and Umrah
42 Law number 38 of 2009 on Post
43 Law number 36 of 1999 on Telecommunication
44 Law number 32 of 2002 on Broadcasting
45 Law number 16 of 2012 on the Defence Industry
46 Law number 2 of 2002 on State Police
47 Law number 25 of 2007 on Investment
48 Law number 7 of 1992 as amended by Law number 10 of 1998 concerning Banking
49 Law number 21 of 2008 concerning Syariah Banking
50 Law number 13 of 2003 concerning Manpower
51 Law number 40 of 2004 concerning National Social Security System
52 Law number 24 of 2011 concerning Social Security Organizing Agency
53 Law number 18 of 2017 concerning Protection of Indonesian Migrant Workers
54 Law number 25 of 1992 concerning Cooperatives
55 Law number 20 of 2008 concerning Micro, Small and Medium Enterprises
56 Law number 38 of 2004 on Road
57 Law number 6 of 2011 on Immigration
58 Law number 13 of 2016 on Patent
59 Law number 20 of 2016 on Marks and Geographical Indications
60 Law number 40 of 2007 on Limited Liability Company
61 Law number 7 of 1983 as amended lastly by the Law number 36 of 2008 concerning
Income Tax
62 Law number 8 of 1983 as amended lastly by the Law number 42 of 2009 concerning
Value Added Tax on Goods and Services and Sales Tax on Luxury Goods
63 Law number 6 of 1983 as amended lastly by the law number 16 of 2009 concerning
General Provisions and Tax
64 Law number 28 of 2009 concerning Local Taxes and Charges
65 Law number 7 of 2016 on the Protection and Empowerment of Fishers, Fishing
Resources, and Salt Farmers
66 Law number 6 of 2014 concerning Village
67 Law number 5 of 1999 concerning Anti-Monopoly Practice and Unfair Business
68 Law number 19 of 2003 concerning State-Owned Entities
69 Law number 11 of 2019 concerning National System of Science and Technology
70 Law number 2 of 2012 concerning Acquisition of Land for Development in the Public
Interest
71 Law number 41 of 2009 concerning Protection of Sustainable Food Crops Farmland
72 Law number 39 of 2009 concerning Special Economic Zones
73 Law number 36 of 2000 as amended by Law number 44 of 2007 concerning Free Trade
Area and Free Port
74 Law number 37 of 2000 concerning Free Trade Area and Free Port in Sabang.
75 Law number 30 of 2014 concerning Government Administration
76 Law number 23 of 2014 on the Local Government
B. The Repealed Laws

NO TITLE

1 Staatsblad year 1926 number 226 Jo Staatsblad year 1940 number 450 concerning
Nuisance Act
2 Law number 3 of 1982 concerning Mandatory Company Registration
 CHAPTER 3
SOME NEW FEATURES INTRODUCED BY THE OMNIBUS LAW

A. Business Licensing Based on Risk

The business licensing shall be obtained by a business actor to carry out its activity depends to risk
associated with the activities. There are three classifications of business activities, low risk, medium
risk, and high risk. Set below is business licensing required for each business activities:

Business Activities Business Standard Certificate Business License

Identification
Number
Low Risk Y N N
Medium Risk Y Y N
High Risk Y Y/N Y

Y=Yes, N= No

B. Simplification of basic requirements to obtain business licensing

To obtain business licensing, business actors shall meet three (3) basic requirements as follow:

a. A project location shall be subject to the detailed spatial planning (Rancangan Detail Tata Ruang –
“RDTR”) determined by local government. A local government shall provide digital RDTR to be
installed into an electronic business licensing system managed by the central government.
b. Must obtain environmental approval. Further information about this can be found at chapter 12 of
the handbook.
c. Having building approval and certificate of worthiness for premise used for business activity.
Further information about this can be found at chapter 8 of the handbook.

C. Simplification of business licensing in the following sectors:

a Fisheries and maritime i Transportation

b Agriculture
c Forestry
d Energy and mineral resources
e Nuclear
f Industry
g Trade, legal metrology, halal
product certification, and
standardization of adjustment value
h Public works and public residential
j Health, medicine, and food
k Education and culture
l Tourism
m Religion
n Post, telecommunication, and
broadcasting
o Defence and security
D. Simplification of investment requirements in the specific sectors.

The Omnibus Law simplify investment requirements as stipulated in the Law number 25 of 2007 on
Capital Investment, Law number 7 of 1992 as amended by Law number 10 of 1998 on Banking and
Law number 21 of 2008 on Sharia (Islamic) Banking.

E. Formation of Housing Administration Acceleration Agency

Government establishes House Administration Acceleration Agency to provide an adequate and
affordable public house for low-income citizen (Masyarakat Berpenghasilan Rendah or “MBR”). House
Administration Acceleration Agency’s organization structure consists of mentoring element,
implementing element, and supervisory element. House Administration Acceleration Agency
establishment has the purpose and objective to:
- Accelerating provision of public house;
- Guaranteeing only MBR occupies and owns a public house;
- Guaranteeing the principle of public house benefit (asas manfaat rumah umum); and
- Executing various policies in the field of public house and exclusive house (rumah khusus).

F. Formation of Indonesian Sovereign Wealth Fund

To improve investment and strengthen the state’s economy for supporting a strategic job creation
policy, central government shall perform investment. Central government, thus, establishes Sovereign
Wealth Fund (Lembaga Pengelola Investasi or “SWF”). SWF is a state-owned legal entity, to improve
and optimize asset value in the long run and to support sustainable development. The SWF consists
of Supervisory Board and Board of Directors as the part of the Fund’s structure. SWF’s investment can
be originated from state’s assets, state-owned enterprises (“SoE”) assets, and/or other legitimate
sources. If SWF performs the investment through the state’s assets and SoE’s assets, the assets
become SWF’s assets and responsibility. In performing the investment, SWF has the authority to:
- Performing fund allocation in a form of finance instrument;
- Performing asset management activities;
- Performing cooperation with other parties (e.g. trust fund entity);
- Determining investment partner candidates;
- Granting and receiving loan; and/or
- Administering its assets.

G. Formation of Land Bank

The Land Bank is a specialized government body which will manage the land in Indonesia. Purpose of
its establishment is to guarantee land availability in manifesting fair economy for the interest of public,
social, national development, economic equity, land consolidation, and land reform. It has function to
implement land, acquisition, distribution, exploitation, planning, possession, and management. Land
bank also has several authorities derived from its right to manage which are:
- Formulating plan of land allocation, usage, and utilization;
- Using and utilizing the part of the land or as a whole to be utilized by its own or to cooperate
with a third party;
- Determining rates and receiving income/compensation and/or mandatory annual money
from the third party in accordance with an agreement.
Land managed under the Land Bank will be in the form of Right to Manage (Hak Pengelolaan). Other
land titles in the form of Right to Build (Hak Guna Bangunan), Right to Use (Hak Pakai) and Right to
Cultivate (Hak Guna Usaha) can be granted on top of the Right to Manage.
 In the light of cooperation with third party, the Land Bank may form a land utilization agreement
(perjanjian pemanfaatan tanah) with a third party, which the third party receives the right to use,
building rights, and exploitation rights pursuant to the prevailing laws and regulations.

Yuliani Yoga, Managing Partner

+62 815 8875 021
yuliani.yoga@ylc-law.com This publication is intended for general
information only and shall not be deemed as any
of our professional advices. All the information
and refers to the future regulation as per the
date of this publication.
Yoga Partnership Legal Consultant
The Vida Building, 3A Floor, Unit 4
Jl. Raya Perjuangan No. 08 YOGA PARTNERSHIP
Kebon Jeruk – DKI Jakarta www.ylc-law.com
Phone: + 62 21 2966 1375
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