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Jakarta, CNBC Indonesia – PT JPMorgan Sekuritas Indonesia considers the existence of the Omnibus Law of the Employment Creation Law (Ciptaker), which was passed in the Plenary Session on October 5, as a positive catalyst for the financial market in Indonesia.
This is because the new law is seen as a reform of existing Indonesian policies, one of which is to attract direct investment (foreign direct investment/ IED).
Henry Wibowo, Executive Director and Head of Indonesian Research and Strategy at JPMorgan Sekuritas Indonesia, said foreign investors had previously seen the development of this law halt due to the Covid-19 pandemic.
However, it turns out that the Indonesian government can prove that this law can be passed under current conditions.
“But see youin the middle of a pandemic although we are not done, it turns out it was successfully approved on October 5, “Henry said in an interview with CNBC Indonesia TV, quoted on Tuesday (10/20/2020).
“It just came to our knowledge then Light at the end of the tunnel where Indonesia’s condition is not yet recovering from the Covid pandemic, but it turns out that there is a new catalyst for the Omnibus Law on Job Creation to increase economic growth, increase employment, and most importantly, bring investment to our country, “he said.
It revealed that this law was necessary to increase the contribution of FDI to domestic economic growth.
In recent years, the contribution of FDI to national GDP has only reached 1.5% -2%, very different from the example of Vietnam, which has contributed 6% to 7% annually.
“We see that Indonesia wants to enter Asia manufacturing center. We know about Asia manufacturing center This is what China has, they opened their economy in 2005 and in the future, but in the last decade or the last five years there have been many countries that want to be part of the Asian manufacturing hub, such as Vietnam and Thailand, and also India ”, he explained . .
Good news has begun to enter the country with the existence of the Omnibus Law, such as Tesla’s plan to build a battery factory in the country, just as LG Chem also plans the same.
Therefore, Henry assesses that this Law is expected to create employment opportunities in the country and have an impact on the GDP of Indonesia.
However, currently the effect of the Omnibus Law is not sufficiently reflected in the movements of the stock market.
Because foreign investors are still waiting for the direct implementation of this law, added to the high wave of resistance from various groups, it is considered that it will cause potential investors to fear investing their capital.
While if we understand the omnibus law in detail, the hope is that we can realize that this is actually a mutual benefit for Indonesia. With the hope that with this Omnibus Law FDI can enter, job creation can also be greater and the hope is that protests or demonstrations can be achieved. completion earlier, “he concluded.
Furthermore, investors are still waiting for a government derivatives regulation that explains the law in more detail.
The Omnibus Law is a Law (UU) designed to tackle a big problem that can change several laws at once to make it simpler.
There are three things that the Omnibus focuses on, namely the tax law, the creation of employment opportunities and the empowerment of MSMEs. The Omnibus Bill specifically for job creation was approved by DPR to become the Ciptaker Act on October 5, but sparked a wave of protests from workers and students.
Previously, Henry predicted that if the content of this new law was in accordance with market expectations, which means that it was accepted by the market and commercial players, the financial and capital market conditions were forecast to be good. .
On the contrary, if the content does not meet expectations, there is a possibility that the market will “rock”.
“The market will pay attention to what the content is, if it becomes law, if the content is not good, then the market is on the side, it is not moving, but it is taken advantage of and the content is good. I think it will be a catalyst positive for the market. JCI could reach the 5,000-6,000 level in the next 6-12 months in the future if the Omnibus Law is positive, “he said.
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