"South Korea Difficult for Business, Should Refer to Indonesia's Pro-Business Policies like the 'Omnibus Law'"

FKCCI Holds Seminar on Investment Opportunities in Indonesia

From the left) Jeon Yumi, Kelly Services Asia Pacific General Manager, Kwon Tae-shin, Vice Chairman of the Federation of Korean Industries, Umar Hadi, Ambassador of Indonesia to Korea, and Lim Min-taek, Lawyer at Yulchon LLC, are posing for a commemorative photo at the '2021 Indonesia Omnibus Law and Strategies for Entering Indonesia Seminar' held at the Federation of Korean Industries Conference Center on the 16th.
[Photo by Federation of Korean Industries]

[Asia Economy Reporter Kim Heung-soon] A private economic organization has argued that the government should refer to Indonesia’s case, where existing laws were amended or abolished in a business-friendly direction to create domestic jobs and attract foreign investment.

On the 16th, the Federation of Korean Industries (FKI) held a seminar titled "2021 Indonesia Omnibus Law and Strategies for Entering Indonesia" at the FKI Hall in Yeouido, Seoul. Recently, the Indonesian government enacted the Omnibus Law to strengthen labor flexibility and ease regulations in order to create jobs and attract foreign investment.

"South Korea is Difficult for Business Due to Three Corporate Regulation Laws and Labor Relations Laws"
"Need to Learn from Indonesia’s Efforts to Create Jobs by Strengthening Labor Flexibility and Reforming Regulations"

According to Kwon Tae-shin, Vice Chairman of the FKI, the Indonesian government succeeded in attracting global companies that chose to move away from China after COVID-19 through the enactment of the Omnibus Law, which amended or abolished over 1,200 contradictory and unnecessary provisions among 76 existing laws, along with proactive corporate IR and strengthened investment incentives as part of pro-business policies.

In fact, last year, seven companies including the U.S. solar company Alpan Lighting, Japan’s Denso and Panasonic, Taiwan’s Meiloon, and South Korea’s LG Electronics confirmed the relocation of their production bases to Indonesia. South Korean investment in Indonesia is also expected to record double-digit growth this year. As a result, foreign direct investment (FDI) in Indonesia last year decreased slightly by 1.2% compared to the previous year. In contrast, global FDI decreased by 42% year-on-year, and FDI to South Korea decreased by 11.5%.

Vice Chairman Kwon emphasized, "Compared to our reality where the government and National Assembly amended labor-related laws such as the Labor Union Act and the Special Employment Act amid the worst difficulties faced by companies due to COVID-19 last year, the Indonesian government’s enactment of business-friendly omnibus laws to attract global capital is a case from which South Korea has much to learn."

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Lim Min-taek, Partner Lawyer at Yulchon LLC Jakarta Desk, introduced in his presentation on "Key Changes and Implications of Labor-Related Provisions in the Omnibus Law" that the Indonesian government has simplified employment-related matters and requirements to promote foreign investment and improve business convenience, including ▲abolishing restrictions on external outsourcing ▲extending the maximum fixed-term employment contract period to five years ▲relaxing employment conditions for foreign workers ▲determining minimum wages considering regional economic growth and inflation.

Jeon Yu-mi, Asia Pacific General Manager of Kelly Services, said in her presentation on "Strategies for South Korean Companies Entering Indonesia," "As the Indonesian government is striving to attract global companies and create a flexible labor environment, now is a good time to enter Indonesia." She added, "Since the amended laws represent significant and complex changes to the labor environment in Indonesia, companies need to prepare accordingly."

Kim Bong-man, Director of International Cooperation at the FKI, explained, "Indonesia is the leader of ASEAN with the world’s 4th largest population (270 million), an average age of 29, and sustained annual growth of over 5%, making it a young and highly potential country." He added, "If the Omnibus Law enacted last November is properly implemented, it will greatly help global companies’ investment in Indonesia." He also emphasized, "South Korea should take this as a mirror and strive to create a pro-business environment."

The FKI also revealed plans to dispatch an economic mission to Indonesia in the second half of the year within the scope allowed by the COVID-19 situation.

This content was produced with the assistance of AI translation services.