Cosmetics firm Avon denies reports it is leaving Indonesia

Bambang Nurbianto, The Jakarta Post, Jakarta

Cosmetics manufacturer PT Avon Indonesia denied on Friday it was planning to close its factory in the Cilandak Commercial Estate in South Jakarta and relocate to a neighboring country.

The public relations manager for PT Avon Indonesia, M.Y. Gunawan, said he had a letter from the company's global office in New York that stressed the company would never leave Indonesia.

He said that despite security concerns, particularly following the Bali bombing, and labor issues, including the government's recent decision to raise the minimum wage, the company would continue to do business in the country.

"We have no plans (to shut the factory). Our business here is proceeding well and we see good prospects in the future," Gunawan told The Jakarta Post at his company's headquarters in Cilandak.

He said Avon had no problem competing against local companies, such as Sari Ayu, Mustika Ratu and Viva Cosmetics.

But he complained that foreign cosmetic products were able to enter the country without complying with Ministry of Health regulations.

If such items are locally produced they are required to obtain permits and must comply with standardization rulings from the health ministry to guarantee the safety of users before they are allowed to be sold.

"Many imported products easily enter the country without fulfilling the standardization bureaucracy," he said.

Gunawan said PT Avon Indonesia, which has been in the country since 1989, produces about 500 cosmetic products and underwear, mostly for women.

The head of the City Investment and Business Empowerment Agency, Hari Sandjojo, told the City Council's Commission B for economic affairs on Thursday that one of the directors of Avon disclosed to him the company's plan to close its Indonesian subsidiary.

Hari repeated his statement to reporters after the hearing with the commission.

Gunawan confirmed there would be a meeting later this month between Avon's directors and city administration officials, but he said he did not know what would be discussed.

He declined to comment on Hari's claim, and he also said he did not know from where Hari got his information.

"All I can say to you is that the news reports were wrong. If you want to get more information, you should meet with our president director, Mr. Agung Karsosardjono. But, unfortunately, he is out of town right now. You should come back and meet with him," he said.

Gunawan said media reports quoting a city administration official as saying PT Avon Indonesia would be closed had caused worry among the company's hundreds of workers.

He added that the workers had been calmed by assurances from company executives that the reports were untrue.

"The PT Avon Indonesia president director explained the matter to the employees, telling them the news report was not true. All of the employees are happy now," Gunawan said.

He said the company has some 800 permanent employees at its central headquarters in Cilandak and its 76 outlets in Java, Sumatra, Kalimantan, Bali and Nusa Tenggara. As many as 250,000 women help in the direct sale of Avon products.

Earlier, electronics producer Sony announced it would close its Indonesian audio manufacturing plant next year, citing a number of factors, including labor disputes and the smuggling into the country of cheap electronic goods.