The Jakarta Japan Club (JJC), a grouping of Japanese companies doing business in Indonesia, has deemed that the direction of the Indonesian government’s omnibus bill was appropriate.
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JAKARTA, KOMPAS — The Jakarta Japan Club (JJC), a grouping of Japanese companies doing business in Indonesia, has deemed that the direction of the Indonesian government’s omnibus bill was appropriate. However, it also provided notes on improving the economy during the second term of President Joko Widodo, in particular regulatory certainty and tax transparency.
JJC president Kanji Tojo said in Jakarta over the weekend that the association could not comment further because the omnibus bill had not yet become law. However, he considered that the omnibus law was generally headed in the right direction.
The JJC also provided a number of recommendations for the economy to the Indonesian government. "We have just received a copy of the draft omnibus bill, so we cannot comment further. It is simply that, after hearing input from a number of government sources, we regard the omnibus law as the right direction," said Tojo.
One issue the JJC has highlighted is minimum wage. According to JJC Policy Recommendation Committee chairman Keishi Suzuki, minimum wage in Indonesia was generally categorized per region, not per industry sector. Demands for wage increases were relatively frequent. "We suggest that the minimum wage category be adjusted to work productivity," Suzuki said.
These improvements would help facilitate smooth business in Indonesia.
Regarding taxation, the JJC suggested a need for improvement towards a more transparent and fair system in Indonesia. Taxation should be based on clear and unchanging rules for better business projections. These improvements would help facilitate smooth business in Indonesia.
"In the 2016 fiscal year, Indonesian courts heard 12,852 tax cases. That same year, Japanese courts heard only 245 tax cases," said Suzuki.
Other recommendations concerned export market expansion, infrastructure development, and human resource development (HRD). The JJC also suggested the need for improved ministerial-institutional communication and coordination, including central and regional agencies. With regard to HRD, Japanese companies in Indonesia were committed to continue sharing technology.
According to Toyota Indonesia assistant president director Masamichi Tanaka, the automaker provided training to Toyota Indonesia employees every 3-6 months. Toyota had a special monitoring team for training programs in regions where it did business.
The JJC membership comprises 715 out of the 2,500 Japanese nationals in Indonesia. According to its records, total Japanese investment over the last decade in Indonesia reached US$31 billion, while Japanese companies in Indonesia had employed 7.2 million workers up to August 2018.
However, its impact on the real sector would take time.
Earlier, PT Bank DBS Indonesia chief economist Masyita Crystallin said that the positive sentiment surrounding the omnibus law was reflected in the rupiah’s strengthening against the US dollar, as well as the capital inflow to the Indonesian market. However, its impact on the real sector would take time.
"The omnibus law has generated positive sentiment about Indonesia. We expect it to affect an increase in investment value. However, the market is still waiting to see how it is implemented," said Masyita.
Not yet public
Regarding the deliberation of the Draft Law (RUU) on Job Creation, the government has clarified the public circulation of the draft bill. The government said that the draft bill currently in circulation was incorrect because it was not the latest revision.
"As soon as it has been approved and sent to the House of Representatives (DPR), the bill will be deliberated in a plenary session that is open to the public. So the draft that is circulating (now) is guaranteed to be incorrect because it is still with us," Susiwijono Moegiarso, the secretary to the Coordinating Economic Minister, said on Saturday (25/1/2020).
The government had also not publicized the official draft.
Susiwijono said that the government was still finalizing the Job Creation Bill, and therefore the draft bill in circulation was definitely not the latest revised version and that the minister’s office could not be held responsible for its correctness. The government had also not publicized the official draft. (APO/KRN)