Global investment bank, Morgan Stanley, estimates that the Omnibus Law for Job Creation, which was officially passed by the parliament on Oct. 5, encourages strengthening of monetary policy, development of the digital economy, and foreign direct investment (FDI) in Indonesia - Photo: Special

JAKARTA (TheInsiderStories) – Global investment bank, Morgan Stanley, estimates that the Omnibus Law for Job Creation, which was officially passed by the parliament on Oct. 5, encourages strengthening of monetary policy, development of the digital economy, and foreign direct investment (FDI) in Indonesia.

“This law is expected to strengthen monetary policy, relatively stable inflation, a more accommodative fiscal policy, and be able to accelerate infrastructure spending,” said the research.

The main objective of the formation and passing of this law is so that FDI can run more smoothly and increase. The law was formed to eliminate bureaucracy and regulations that were previously considered overlapping.

The bill was formed by revising 79 laws and 1,244 articles. It includes relaxation in eliminating the negative investment list, labor reform, ease of licensing, land acquisition, and streamlining of government administration. In addition, Morgan Stanley also assessed that the Omnibus law will also complement the corporate tax rate cut incentives that were passed earlier this year.

According to an analysis from Morgan Stanley, the impact on business actors from the passage of this law in Indonesia is the growing development of technology startups, due to the potential for technology transfer in the digital economy. The digital economy that is developing in Indonesia is starting to grow due to the role of technology startups, it can be seen in the daily life of Indonesians that they are starting to use various media and technology platforms for their daily activities.

Currenly, Indonesia succeeded in producing prestigious startup companies, some of them are unicorns and one decacorn. These startup companies include the transportation and logistics sector (GoJek), payments (Ovo/Gopay), e-commerce (Bukalapak, JD.ID, Tokopedia, and others), and travel and tourism (Traveloka). Their gross transaction value has tripled in a year.

According to reserach, GoJek‘ current market capitalization is US$1.2 trillion, almost close to the market capitalization of one of the blue chip issuers, namely PT Astra International (IDX: ASII). However, the rapid digital economy must be supported by a good technology platform, rapid adoption by the community, the availability of affordable gadgets, and improved infrastructure, so that unwanted problems are not potential.

China

Another impact of the omnibus law is that the cooperation between Indonesia and China is getting closer. China has partnered with Indonesia for a long time as its biggest coal customer in the past. However, partners with China are increasingly expanding into various fields, including infrastructure, health, the digital economy and resources.

The value of China’ FDI to Indonesia has increased in the last 5 years to a CAGR of 43 percent. Until now, China’ investment has grown faster than other countries. The role of the strategic investors has also helped the rise of Indonesia’ technology unicorn, by facilitating the transfer of capital and technology.

Chinese companies have invested heavily in a nickel smelter in Morowali, Southeast Sulawesi, making Indonesia the largest nickel producers in the world. Then, the cooperation was again carried out between both are the COVID-19 vaccine production between inovac and the state-owned pharmaceutical company, PT Bio Farma.

This vaccine has entered phase III clinical trials and is produced up to about 300 doses. The plan, this vaccine will be given to the public starting at the end of 2020.

Edited by Editorial Staff, Email: theinsiderstories@gmail.com