Indonesia's labor problems scare off Japanese investors: Sato
Indonesia's labor problems scare off Japanese investors: Sato
By Kornelius Purba
TOKYO (JP): A senior Japanese economist and an Indonesian
envoy to Japan have warned that it would be difficult for
Indonesia to attract new investment from Japan if no solution is
found to solve the labor problems in the country.
Yuri Sato, a senior economist at the Institute of Developing
Economies, under the powerful Japan External Trade Organization
(JETRO) who specializes on Indonesia, said that Indonesian
neighbors in Asia are offering much more attractive conditions
for Japanese investors, including a better labor environment.
Sato pointed out that other Asian countries, like Vietnam,
Laos, Bangladesh, and especially China, offered more attractive
incentives for foreign investment, including cheap and skilled
workers.
"Japanese companies might maintain their presence in
Indonesia. But for new investment they prefer to wait and see,"
told The Jakarta Post on Thursday.
Since the downfall of former authoritarian leader Soeharto in
1998, labor protests have become a common sight in the country's
labor intensive industries. When negotiations falter, labor
unions resort to strikes, which often turn violent, to force the
management to bow to their demands.
Sato said she fully empathized with Indonesian workers'
complaints and demands, because in the past they were often
abused and their rights ignored. In the climate of reform and
democratization they have had a much better chance to express
their aspirations.
"However there must be a process of give-and-take to reach a
compromise," Sato told the Post.
Indonesian Ambassador to Japan Soemadi Brotodiningrat said it
would be difficult to attract new investment and even to maintain
the current foreign investment in Indonesia if labor disputes
could not be settled amicably.
Soemadi said the Japanese private sector and government fully
understand that Indonesian workers, in the spirit of reform, are
fighting to get better treatment and welfare from the companies
where they work, and they are ready to negotiate with the workers
for the sake of both sides.
Emphasizing that it is understandable that many workers are
disappointed and impatient because their employers often fail to
fulfill their commitments, the senior diplomat however warned the
workers not to turn violent and become involved in vandalism.
"The Japanese business community acknowledges that workers
have the right and freedom to fight for their rights, however
they cannot accept violent protests and damage to the company
assets. They are ready to face peaceful protests," Soemadi told
the Post on Thursday.
Soemadi, who prior to his current position held the position
as director general of Foreign Economic Cooperation at the
Ministry of Foreign Affairs, said the Japanese businessmen had
repeatedly voiced their concern about the labor conditions to
President Abdurrahman Wahid, Coordinating Minister of the Economy
Rizal Ramli and other Indonesian ministers during their visit to
Tokyo.
Putting aside labor problems, Sato said Japanese companies in
Indonesia acknowledged that their production activities have
significantly improved, especially in the automotive and
electronics sectors.
Their main concern about corporate debts, and the slow
resumption of banking lending activities, and the economic
restructuring however are still not resolved.
According to her, many Japanese companies and Chinese
businessmen in Asia are closely following the settlement of the
problems between the Indonesian Banking Restructuring Agency
(IBRA) and the Salim Group.
Despite the gloomy labor conditions, the Indonesian ambassador
however said trade activities between the two countries have
shown encouraging signs, although the figures still are not able
to match those of pre-1997 levels before the economic crisis in
Indonesia.
"According to my own data, non-oil and gas export to Japan
increased 29 percent last year compared to 1999," said Soemadi.
The bilateral trade volume from January to October last year
showed that Indonesia enjoyed a big trade surplus of over US$6.28
billion. The total volume of trade between the two countries
reached US$19.70 billion, with Indonesian exports at about $13.42
billion.
In 1999, the trade volume was about $17.56 billion, including
exports worth $12.65 billion, he noted.
The most important export products include seafood, plywood,
engine components, and copper. Imports include engines,
automotive and electronic components which are needed by Japanese
manufacturers in Indonesia.
On investment, the ambassador disclosed that last year the
Indonesian government approved 88 projects worth $1.9 billion
from Japanese investors, mainly from medium and small scale
enterprises. This figure is much higher compared to only $664.3
million in 1999, and $1.23 billion in 1998.
"I share the concern about new investment from Japan, but this
trend is quite encouraging," the diplomat noted.