Advocacy Paper on Draft of the Omnibus Bill on Job Creation (RUU Cipta Kerja) for Micro, Small and Medium Enterprises

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Pusat Studi Hukum dan Kebijakan Indonesia [PSHK]
Micro, Small, and Medium Enterprises (MSMEs) play a critical role to sustain national economy. In many countries, such as Finland, France, Italy, South Korea and Australia, almost 100% entrepreneurs work in small and medium enterprises with more than 60% labor absorption. In Indonesia, over 64.2 million MSMEs are recorded to contribute 99.9% of the total entrepreneurs with labor absorption of 97%. Indonesia’s SME Sector is considered to be capable of surviving throughout unstable economic conditions. For instance, during the 1998 economic crisis, the growth of the manufacturing and service industry took a halt. In line with the stagnation of growth in these sectors, Loayza and Rigolini (2011) described the role of MSME from the informal sector as the “safety network” because workers who were affected by the termination of employment from the formal sector tend to shift to the informal sector.