Indonesia must address labor problems: Badawi

The Jakarta Post, Jakarta

Malaysia, which has been aggressively looking at business opportunities in Indonesia, joined a host of other foreign countries on Wednesday in voicing concerns about the growing militancy among Indonesia's labor unions.

Deputy Prime Minister Abdullah Ahmad Badawi, winding up his high-profile three-day visit in Indonesia, told reporters that investors would turn to other countries if they found that industrial relations in Indonesia were not attractive.

Badawi, whose entourage included 72 CEOs from top Malaysian companies in various sectors -- oil and gas, plantation and telecommunications among them -- held a breakfast meeting with local news editors to give his impressions of the visit.

The investment climate in Asia has become fiercely competitive especially from cheap labor in other countries such as Cambodia, Laos, Vietnam and China, that investors could simply relocate if they felt the labor unions were too militant, he said.

"They would shut down their plants and move elsewhere," Badawi said, adding that Malaysia too has had its share of foreign companies relocating to the more attractive north.

It was Malaysian Ambassador to Indonesia, Rastam Mohd. Isa, who cited the growing militancy among Indonesia's labor unions as one of the major concerns among Malaysian investors, including those who are already operating in Indonesia.

"Indonesia could price itself out of the competition because of this," the ambassador said.

Japan and South Korea, two major sources of foreign direct investment for Indonesia, have also cautioned about the growing problem of industrial relations in Indonesia as a major factor that could discourage their companies from coming here.

Badawi on Tuesday urged the accompanying Malaysian business leaders to explore the investment opportunities in Indonesia.

Some of these companies were also looking at the possibility of buying corporate assets currently in the hands of the Indonesian Bank Restructuring Agency (IBRA).

Financial group Commerce Assets-Holding Bhd, which owns Malaysia's third largest banking group Bumiputera-Commerce, is one of the two final bidders for the assets of medium-sized Bank Niaga. Malaysian consortia are also vying for some of Jakarta's toll road construction projects.

Badawi promised on Wednesday that the government would play an active role in monitoring the follow up of all the business agreements and discussions held during his visit in Indonesia.

"Our role is to facilitate, not to obstruct the investors," he said.

Malaysia is particularly keen in helping Indonesia resolve its economic problems because of the Islam-Malay cultural connections between the two countries, Badawi said.

At a time when the world was concerned about growing Islamic militancy, Malaysia and Indonesia could become the model of "progressive, yet moderate Islamic countries," he said.

While Malaysia won praise from the U.S. and Australia for clamping down hard against radical Islamic groups, Indonesia has been widely criticized for its lack of action.

Badawi broached Malaysia's proposal to host a secretariat for a new forum that groups the 10 members of the Association of Southeast Asian Nations (ASEAN) with Japan, South Korea and China.

The ASEAN+3, as the loose forum is presently called, is the culmination of a long campaign by Kuala Lumpur to establish an economic organization for East Asian countries.

The idea initially received a cool response from Japan, and was rejected by Australia and the United States who feared the establishment of an economic bloc in the region. But it has now picked up after leaders of the three countries joined the ASEAN summit on two occasions already.

"Japan is today far more receptive to the idea," Badawi said, adding that ASEAN+3 could also provide the groundwork for such conferences as the Asian-Europe Meeting (ASEM).

Badawi recalled that it was at an ASEAN+3 summit in Kuala Lumpur that China gave its word that it would not devalue its currency, knowing that such a drastic measure would hurt many Southeast Asian economies.

"They (China) have stuck to their promise," he said.