Labor conflicts turn away foreign investors: Rini

Labor conflicts turn away foreign investors: Rini

A'an Suryana, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini Soewandi said on Friday that
many foreign manufacturers had shut down or relocated their
businesses here to other countries due to lingering labor
conflicts and a high cost economy resulting from illegal fees.

Rini said there had been fears that labor conflicts could
disrupt the delivery of goods for the export market.

Foreign manufacturers are mainly export-oriented companies,
which must assure their buyers that they can meet delivery
targets.

"Illegal fees are also a problem ... We must resolve all
these problems," she was quoted by detik.com as saying during a
visit to a textile company in Sukoharjo, Central Java.

Rini also acknowledged, however, that the global economic
slowdown was also a factor that caused the companies to shut down
their operations because of weaker demand.

As an example, she pointed out how U.S. giant shoemaker Nike
had cut down its orders from a local factory.

The Korean Chamber of Commerce (KOCHAM) warned earlier that
more South Korean manufacturers operating here would shut down
their operations or relocate to Vietnam or Myanmar, which have
better investment climates, if the government of Indonesia failed
to quickly address the various problems hurting their businesses.

KOCHAM said that some 36 companies had either shut down or
relocated their operations during the past year, leaving some
32,000 workers jobless. More companies are preparing to pull out
of Indonesia. Among the reasons stated for the mass exodus were
unfavorable labor policies, an irrational increase in labor
wages, labor strikes, low productivity and poor law enforcement.

The warning is expected to serve as a wake-up call for the
government to immediately take measures to improve the investment
climate here. This is vital particularly because foreign
investment is badly needed to help push economic growth so that
jobs can be created for the huge number of people who are
unemployed, which according to one estimate reaches a staggering
40 million.

Chairman of the National Economic Recovery Committee (KPEN)
Sofjan Wanandi said that the issue of the exodus of foreign
manufacturers from the country was at the top of the agenda of
the new crisis center.

Sofjan helped set up the crisis center, an agency led by Rini
to help resolve various problems faced by businesses here.

He said that the center would soon arrange a round-table
meeting comprising foreign investors, labor unions and government
officials to help address the problem of labor conflicts and
other labor-related issues.

"The meeting will be held within the next few days," he said.

According to Sofjan, the second priority of the crisis center
was to address security problems faced by businesses, including
extortion by local thugs.

Djimanto, an executive at the Indonesian Businessmen's
Association, said that rampant labor protests and illegal fees
had created serious difficulties for local manufacturing firms.

He said that labor protests had not only threatened the timely
delivery of goods but was also affecting worker productivity.

"Not only the delivery time, but labor protests have also
reduced the productivity of workers," said Djimanto.

But chairwoman of the National Front for the Struggle of
Indonesian Workers (FNPBI), Dita Indah Sari, dismissed the
suggestion that labor protests had caused foreign investors to
abandon the country.

She said the exodus of foreign manufacturing firms was mainly
due to the global economic slowdown as foreign buyers had been
cutting down import orders from Indonesia.