General Legal Guide for Doing Business in the Omnibus Law Era

This publication is prepared by Nusantara Legal Partnership in collaboration with ONC Lawyers (a Hongkong law firm) and Kuroda Law Offices (Japanese law firm), has prepared a trilingual version of guide on doing business in Indonesia. You can access and download it here.

Indonesia is the world’s fourth most populous country in the world with 270 million population. It is the world’s 10th largest economy in terms of purchasing power parity, and a member of the G20 with a vast natural resource. The country has a growing domestic economy and an enviable demographic projection. Indonesia has made enormous gains in poverty reduction by successfully cutting the poverty rate more than half since 1999 to 9.78% in 2020. Indonesia was the second-fastest growing economy in G-20 from 2012 until the COVID-19 outbreak hit in 2020. It is, however, ranked third after China and South Korea in terms of economic growth among G-20 economics according to Bloomberg data collected in September 2020. Indonesia’s economy was disrupted in 2020 with a negative growth of 2.1% from 2019 (5.0% YoY). This is the first contraction experienced by Indonesia since the Asian financial crisis of 1997-1998. The World Bank, however, has forecasted that the Indonesian economy would rebound by 4.4% in 2021. Backlashes of the COVID-19 pandemic have, undoubtedly, forced the Indonesian government to make efforts to curb such bleak outcomes, one of which by engaging in major economic reforms through the issuance of Law No. 11 of 2020 on Job Creation (Omnibus Law). The Omnibus Law and its implementing regulations intend to intensify Indonesia’s economic attractiveness and accelerate the economic recovery by lowering corporate taxes, reorganizing rigid employment laws, simplifying business licensing system, and reducing bureaucratic and regulatory barriers to investment. The regulations also provide a basis to promote many sectors, including healthcare services, technology, and telecommunication. In addition, the country’s emerging e-commerce is unveiling more entrepreneurial dispositions, also building a basis to overcome challenges of the industry 4.0.

According to the Strategic Investment Planning for 2020 – 2024 of BAPPENAS (the National Development Planning Agency), the government would focus on the expansion and development of several major business sectors, including (i) infrastructure, (ii) agriculture, (ii) manufacturing, (iv) maritime, also (v) tourism, special economic zones, and industrial parks.

As such, we have prepared general legal guide on how to do business in Indonesia, taxation, corporate compliance, employment, dispute resolution, as well as business restructuring and liquidation in Indonesia.