Overview of Indonesian Agricultural Sector in Omnibus Bill On Job Creation: Challenges and Perspectives

Overview of Indonesian Agricultural Sector in Omnibus Bill On Job Creation: Challenges and Perspectives

Published: 2020.11.27
Accepted: 2020.11.26
13
Indonesian Center for Agriculture Socio Economic and Policy Studies
Senior Agricultural Economist and Research Professor
Indonesian Center for Agriculture Socio Economic and Policy Studies (ICASEPS), Ministry of Agriculture, Indonesia

ABSTRACT

This article aims to have an overview of the existing agricultural sector in the Omnibus Bill on Job Creation in Indonesia. The essence of this regulation is quite imperative since Indonesia has numerous regulations in which some are not effectively implemented and others are overlapped. For agricultural sector, in particular, the Omnibus Bill changes, abolishes, and sets new formulation on several provisions stipulated in certain regulations. It is considered to open up opportunities for increasing foreign direct investments in this sector. Above all, stakeholders must monitor the development of the Omnibus Bill and the issuance of the supporting technical regulations towards optimizing the implementation of job creation in the country.

Keywords:  Omnibus Bill, job creation, agriculture, Indonesia

INTRODUCTION

On the 5th October 2020, the Government of Indonesia (GoI) through the House of Representative (Indonesian Parliament) approved the regulation namely the Omnibus Bill on Job Creation. This regulation introduces some key amendments to several sectors including agriculture (DPR-RI, 2020a). Even though it is politically quite controversial, this regulation creates labor market flexibility towards improving international competitiveness of the country. 

The Omnibus Bill on Job Creation, whose scope is wide-ranging, should help to reduce longstanding impediments to doing business in Indonesia by reducing red tape (conformity to formal standards), simplifying land acquisition processes, easing restrictions on foreign investments, loosening labor laws, and providing more incentives to free-trade zones. The reforms will put Indonesia in a better position to capitalize on shifts in global manufacturing supply chains. This Bill initiates to improve the ease of doing business in Indonesia and attract investments, thereby boosting job opportunities and economic growth since it focuses on streamlining business licenses, making the country more open to foreign investments and have a more flexible labor market (Jakarta Post, 2020). Moreover, job creation deals with various aspects of people's lives, such as the relationship between job creation that affects economic growth and the relationship between population projection and the needs of the Indonesian economy. In this context, the projection of population growth has implications for the labor aspect (DPR-RI, 2020b).

This article aims to have an overview of the existing agricultural sector in the Omnibus Bill on Job Creation in Indonesia. It discusses the substance of Omnibus Bill, the essence of agriculture sector in the respected regulation in terms of challenges and upcoming perspective, as well as policy implications as a conclusion.

THE SUBSTANCE OF OMNIBUS BILL

Semantically, omnibus is derived from the Latin word which means “all.” In relation to law, the omnibus defines numerous objects with various purposes at once. Hence, the Omnibus Bill packages together several measures into one combination of diverse subjects in a single law. The various meanings of omnibus can be understood as a statutory regulation that is made to target a major issue to which it can revoke or change several laws at once to be simple (Anggraeni and Rachman, 2020).  

The Omnibus Bill is an effort to create job through facilitating business, protecting and empowering the micro, small and medium enterprises, improving investment ecosystem and simplifying business conduct, implementing central government investments, and accelerating national strategic projects. This regulation comprises of 15 chapters and 174 articles (Table 1) which is implemented based on the principles of equal rights, legal certainty, and ease of doing business, inseparability, as well as independence. It is recommended to create the widest possible employment opportunities for the Indonesian people evenly throughout the territory of the country.

The essence of the Omnibus Bill is quite imperative since Indonesia has numerous regulations in which some are not effectively implemented and others are overlapped. It is noted that there are 42,875 regulations comprising of 1,687 Laws, 4,735 Government Regulations, 2,008 Presidential Regulations, 14,722 Ministerial Regulations, 3,758 Non-ministerial Government Institution Regulations, and 15,965 Regional/Local Regulations (MoLHR, 2020). Thus, the implementation of the Omnibus Bill is necessary towards addressing public policy conflicts, harmonizing government policies, and assuring legal certainty for policy makers both at the central and local government levels effectively and efficiently. 

THE ESSENCE OF THE AGRICULTURE SECTOR IN THE OMNIBUS BILL

Agriculture is one of the sectors included in business licensing procedures of the Omnibus Bill on Job Creation. Other sectors are Marine and Fisheries; Forestry; Energy and Mineral Resources; Nuclear; Industry; Trade, Legal Metrology, Halal (permitted) Product Assurance, and Conformity Assessment Standardization; Public Works and Housing; Transportation; Food, Health, and Medicine; Education and Culture; Tourism; Religious; Post, Telecommunications, and Broadcasting; as well as Defense and Security.

Challenge

The Omnibus Bill on Job Creation regulates the sectoral business licensing procedures.  In order to provide convenience for the community, especially business actors in obtaining business permits from the agriculture sector, this Omnibus Bill changes, abolishes, and sets new formulation on several provisions stipulated in certain agricultural regulations. They are: (1) the Law Number 39/2014 on Estate Crops; (2) the Law Number 29/2000 on Plant Variety Protection; (3) the Law Number 22/2019 on Sustainable Agricultural Cultivation Systems; (4) the Law Number 19/2013 on Protection and Empowerment of Farmers; (5) the Law Number 13/2010 on Horticulture; and (6) the Law Number 18/2009 on Livestock and Animal Health.

It is challenged that some aspects are amended in the Omnibus Bill related to the afore-mentioned regulations. It includes, among other things, land use requirements, land conversion, seed provisions, types of variety, cultivation systems, pest and disease management, processing, infrastructure, licensing procedures, certification, partnership, internship, financing, investment, information system, monitoring and evaluation, guidance and supervision, as well as role of central and local government authorities   

Perspective

The Omnibus Bill on Job Creation amends some prominent aspects to which it has certain implications in the agriculture sector. The perspectives of altering points-based previous and current regulations, among other things, are substantially summarized in Table 2.

The Omnibus Bill brings many changes to the agriculture sector provisions. One of its effects is relaxation includes prioritization and importation of horticulture. Previously, it required a license to import the horticulture seeds. At present, the Omnibus Bill provides relaxation which affects the production of this sub-sector in terms of the opportunity for business actors including farmers to import seeds after obtaining a business license from the government.

The relaxation of seed import and agriculture production allows the process of technology transfer and sharing practices to take place. However, it is necessary to implement policy/program(s) based on collaboration of government and private sector supported by research and development to increase production effectively and to improve rural economics particularly (Ind Time, 2020).

CONCLUSION

The ratification of the Omnibus Bill on Job Creation is considered to open up opportunities for increasing foreign direct investments in the agriculture sector. However, this influx investment needs to be accompanied by a transfer of technology and knowledge benefited for Indonesian labor. Business actors and agricultural labors should ideally respond to these changes since the investments will open up jobs in line with learning new technologies and knowledge as well as accomplishing export.

It is underlined that the law formation in Indonesia needs the joint approval both from legislative and executive bodies. In addition, it is required that there should be implementing regulations of the law in line with constitutional regulatory framework in the country. In other words, there is a need for further provisions of government regulations. Above all, stakeholders must monitor the substance of the Omnibus Bill and the issuance of the supporting technical regulations towards optimizing the implementation of job creation in Indonesia.

REFERENCES

Angraeni, R. and Rachman, CIL. Omnibus Law in Indonesia: Is that the Right Strategy? Advances in Economics, Business and Management Research, Vol. 140. International Conference on Law, Economics and Health (ICLEH 2020). Published by Atlantis Press SARL.https://www.researchgate.net/publication/341512891_Omnibus_Law_in_Indone... (23 October 2020).

DPR-RI. 2020a. RUU Cipa Kerja (Job Creation Bill) Indonesian House of Representative. Jakarta.

DPR-RI. 2020b. Naskah Akademik RUU Cipta Kerja (Academic Manuscript of Job Creation Bill). Indonesian House of Representative. Jakarta.

IDN Times. 2020. Omnibus Law Permudah Kebijakan Impor Benih untuk Pertanian (Omnibus Law Eases Seed Import Policy for Agriculture). https://www.idntimes.com /business/economy/hana-adi-perdana-1/cips-omnibus-law-permudah-kebijakan-impor-benih-untuk-pertanian/3 (23 November 2020)

Jakarta Post. 2020. Omnibus Law boosts Indonesian Growth Prospects. Retrieve from https:// www.thejakartapost.com/academia/2020/10/19/omnibus-law-boosts-indonesian... -prospects.html (22 October 2020)

MoLHR. 2020. Koleksi Peraturan Perundang-undangan (Collection of Legislations). https://peraturan.go.id/ (23 November 2020). Ministry of Law and Human Rights. Jakarta.

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