Indonesian President Joko Widodo urged the House of Representatives to finish discussing the draft omnibus laws in three months - Photo by President Office.

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo urged the House of Representatives to finish discussing the draft omnibus laws in three months. The government aims to submit the laws to parliament in this month to replace dozens of overlapping measures in a bid to improve the investment climate and create jobs in Southeast Asia’ biggest economy.

“Starting this week, the government submits to the parliament. I have asked House Speaker to finish discussing the draft in three months,” said the president in Merdeka Palace on Monday (12/16).

Widodo revealed a job creation omnibus bill to simplify 82 existing laws hampering businesses will be filed this week. It followed by the taxation rules to reform the tax system by revising seven laws in a single bill that will submit by January 2020. After that, the government will propose an omnibus law related to the medium and small-medium enterprises (MSMEs).

Widodo’s new approach comes as efforts to open up investment opportunities in his first term were often blunted by red tape and vested interests. The laws aim to package multiple, unrelated areas of legislation that can be agreed with a single vote.

The job creation bill will cover 11 areas, including steps to ease restrictive labor laws and allow the government to establish a land bank to allocate space to investors, coordinating minister of economy Airlanggra Hartato told reporters days ago.

Indonesia now has generous mandatory severance compensation that investors say deters formal hiring. The bill will also ease investment rules and target issues ranging from immigration to intellectual property rights, Hartato explained.
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Meantime, the taxation law will include a phased cut in corporate taxes to eventually reach 20 percent, from 25 percent now, and rules to tax electronic transactions. Finance minister Sri Mulyani Indrawati repeatedly said to reform the tax system by revising seven laws in a single bill.

It also aims to introduce a fairer personal income tax regime, relax rules on prepaid value-added tax payments and encourage reinvestment of dividends, among other steps, according to Indrawati.

Widodo argues it means he can tackle many issues more quickly in a country where deliberating on a bill can be lengthy. In his first term, he sought to streamline regulations and put government services online, but only had limited success in boosting investment.

The coalition backing Widodo controls 74 percent of the seats in parliament, boosting the prospect of getting the legislation through. But changes to labor rules are politically sensitive and Widodo’s own party – Demokrasi Indonesia Perjuangan Party or PDI-P – has previously sided with trade unions. However, proposed tax changes appear to faceless public opposition.

Besides at the central level, the president also encouraged deregulation at the regional level via revision and simplification of regional regulations. According to Widodo, local regulations that are felt to hamper and burden the work of regional leaders should be proposed to be cut at once.

The head of state explained, currently, there are 42 thousand regulations in Indonesia. This, according to him, makes the government move to be hampered when making a decision.

Moreover, the government aims to simplify the bureaucracy to become more streamlined and flexible. It by trimming echelon III and IV and replaced with artificial intelligence (AI), Widodo noted.

“Later with the big data that we have, with the network that we have, it will be very fast if we use AI. It’s not long-winded, not spinning. It’s not a difficult item, it’s an easy item and makes it easy for us to decide as leaders,” the president ended.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com