“Appreciation from a number of international institutions shows us (we are) on the right path. I am optimistic that the Job Creation Law can make people happy and prosperous,” he said in a statement issued in Jakarta on Wednesday.
According to his statement, many world-level institutions, such as the World Bank, the Asian Development Bank, Moody's, Fitch Ratings, and the TMF Group, have welcomed the ratification of the Job Creation Law. The law is expected to aid the recovery of the Indonesian economy.
Moeldoko said he believes that the Job Creation Law will be able to leverage the economy for people's welfare.
"If the business world develops, the economy will grow faster, decent work opportunities will be more open, and domestic products will be more competitive," he explained.
Moeldoko added that the Job Creation Law is expected to foster an investment climate and increase business competitiveness. In addition, the law may also prove a powerful tool to help Indonesia become a developed country by 2045.
"Many countries are trapped in the middle-income trap because of a number of regulations that make it difficult for the business world (to grow). The Job Creation Law removes this barrier, so the economy will grow. Indonesia can escape from this trap," he explained.
In addition, the Job Creation Law is expected to reduce the investment ratio needed to raise the GDP or Incremental Capital Output Ratio (ICOR), he stated.
Based on the Macroeconomic Framework and Principles of Fiscal Policy (KEM-PPKF) document for 2021, Indonesia's ICOR figure in 2018 was 6.44 and the following year it increased to 6.77.
"The ICOR figure above six is far from ideal. There are bureaucratic and licensing inefficiencies. The Job Creation Law eliminates this," Moeldoko noted.
As a pro-people regulation, the law can not only open up the widest possible job opportunities, but also provide great opportunities for Micro, Small, and Medium Enterprises (MSMEs) and cooperatives to start and develop their businesses, he said.
"In addition to cutting down licensing, this law guarantees market access," he pointed out.
Earlier, Bank Indonesia had said that MSMEs could emerge as a new source and the main driving force for the Indonesian economy. Meanwhile, the Ministry of Cooperatives and SMEs said that the contribution of MSMEs to Gross Domestic Product (GDP) could be 61 percent, with their contribution to exports reaching 18 percent by the end of 2020.
In his statement, Moeldoko urged all Indonesian people to support the government's efforts to improve the nation. According to him, the Indonesian economy will recover and be sustainable thanks to the current climate of optimism.
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Translator: Rangga P, Azis Kurmala
Editor: Rahmad Nasution
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