Foreign investors' flight

Foreign investors' flight

From Media Indonesia

Labor movements constitute the main reason why foreign
investors are leaving Indonesia, according to a Media Indonesia
editorial, Aug. 28, 2002. Is this view correct?

First, a survey of productivity has indicated that when
Indonesian workers' productivity increases, their wages stay low,
but when wages rise slightly, higher productivity is demanded of
them. Meanwhile, the Central Board of Statistics has found that
in the period of June 2001 to December 2001, wages in real terms
declined by 4.4 percent on average from Rp 230,200 to Rp 222,220
(Kompas, June 4, 2002).

Labor conditions today are inseparable from political, social
and economic affairs. In the New Order period, Indonesia provided
tax facilities for investors, along with the campaign to promote
the country's cheap labor.

The history of capital movement shows that some industries in
Japan, Europe and the U.S. moved to Korea and Taiwan in the 1970s
for lower costs, and later to Indonesia, Malaysia and Thailand in
the 1980s for the same reason. At present, the investors are
turning to Vietnam, China and Cambodia with the same argument,
i.e. the issue of labor movements and wages.

In fact, foreign investors can leave the country any time.
They should not blame the workers. If they find fewer facilities
and make less profit in Indonesia, they can go as long as labor
rights are respected and liabilities settled pursuant to the
existing laws.

ESRA NABABAN

Jakarta