Korea targets RI despite labor concerns
Korea targets RI despite labor concerns
Tony Hotland, Jakarta
Despite major concern at frequent increases in wage rates
despite the relatively low productivity level of Indonesian
workers, Korean businesspeople plan to keep Indonesia as one of
their main trading partners.
"The productivity of Indonesian workers is quite good, but
some Korean businesspeople are worried about the increasing rate
of labor wages," chief executive officer of the South Korea
Chamber of Commerce and Industry Hyo Sung Kim said on Wednesday.
"They say there's always an increase every year and that the
trend will continue. It's one of the main concerns that has
caused many of our businesspeople to decide to relocate their
companies to other countries," he said.
Kim, along with some 20 businesspeople from South Korea,
attended the 12th bilateral economic meeting between the two
countries on Wednesday.
The meeting was also attended by head of the Indonesia-Korea
Economic Cooperation Committee Soy Pardede and head of the
Indonesian Chamber of Commerce and Industry M.S. Hidayat.
Many foreign investors have decided to relocate their
businesses to other countries, such as China and Vietnam, due to
the increasing salary levels set by the Indonesian government.
China sets a US$69 minimum monthly wage, Vietnam $45, and
Indonesia $80 (average).
Soy admitted the concerns, saying that the government was
stepping up efforts to improve its economic policies and
strategies in Indonesia to attract more investors.
"About the increasing level of salaries -- I do think it
should be left to the private sector to decide because each
company or industry has a different capability (to pay wages),"
he said.
Nonetheless, Kim gave an assurance that Indonesia would remain
South Korea's main trade partner due to Indonesia's enormous
market.
"For oil and gas we rely heavily on Middle Eastern countries,
but their price has been going up so we have to diversify our
import sources.
"The second is that ASEAN countries are becoming one economic
bloc, so we have to seek opportunities to increase our market
activities in this area," he said.
Kim said that South Korean business players were eyeing high-
value-added industries, such as information and high technology
and development of natural resources, and power generator
projects, for investment.
South Korea's current main investment areas are focused on
labor-intensive industries such as textiles, footwear and
garments.
Latest data from the Investment Coordinating Board (BKPM)
shows 41 newly approved investment projects from South Korea,
worth $39.1 million.
Both parties also agreed that the manufacture of machinery and
automotive components, rubber, plastic goods and furniture had
good prospects for the future.
Indonesia mainly exports crude palm oil, natural gas,
agricultural and mining products, and wood to South Korea.
Indonesia mostly imports advanced textile and organic chemical
products, general machinery and electronic goods from the
country.
Indonesia's total exports to South Korea stood at $3.9
billion, while imports stood at $1.37 billion in 2003.