The Omnibus Law on Job Creation was passed by the Indonesian House of Representatives (DPR) on Monday.
A number of foreign financial institutions are analysing and predicting the impact of the enactment of this law.
For example, Morgan Stanley’s research states that this law is expected to strengthen monetary policy, inflation, accommodative fiscal policy, and accelerate infrastructure spending.
In the report, it also stated that the Omnibus Law was intended to attract more foreign capital entering Indonesia and to cut the bureaucracy that was previously complicated and inefficient. Furthermore, technology startup players will develop more rapidly. This condition will encourage technology transfer in digital terms.
Quoting CNBC Indonesia Head of Asia Pacific Sovereigns Fitch Ratings Stephen Schwartz, the Omnibus Law is a good catalyst to encourage investment in Indonesia. Although investors still need time to see the progress of the implementation of this law, there will be many relocations of factories from China to Indonesia, as long as everything runs smoothly.
“This law also supports structural reforms that have been a major obstacle to investment in Indonesia. The opportunity that can be grabbed by Indonesia is manufacturing due to the disruption of factories in China during the COVID-19 crisis,” Stephen said.
According to World Bank records, 33 industries have relocated factories from China, 23 to Vietnam and 10 others to countries in Southeast Asia.
Vice President Senior Credit Officer of Corporate Finance Group Moody’s Investors Service, Jacintha Poh, in her statement said that licensing foreigners to own apartments in Indonesia would be a positive catalyst for property developers. Jacintha added, it takes time for sales to rise higher, between the timeline for sales and subsequent revenue.
In Article 143 of the Omnibus Law, it is stated that “ownership rights to flat units are ownership rights over separate individual flats with joint rights over common shares, common objects, and common land”.