LPS to Disburse Severance Pay for 2,500 Laid-Off Pakerin Workers
The Special Advisor to the President for Labour and Worker Welfare, Said Iqbal, has confirmed that the Indonesia Deposit Insurance Corporation (LPS) will disburse Rp159 billion from PT Pakerin’s funds held at Bank Prima to cover severance payments for 2,500 employees affected by layoffs.
This announcement was made by Said Iqbal, who also serves as the President of the Confederation of Indonesian Trade Unions (KSPI), during a virtual press conference on Sunday (28/06/202_). As previously reported, the Financial Services Authority (OJK) has liquidated Bank Prima, and company funds ranging from Rp800 billion to Rp1 trillion remain under the supervision of the institution.
“These liquid funds will be released by the LPS, provided that 2-3 directors of PT Pakerin sign the necessary documents. This process is currently underway and the funds will be used to pay employee severance,” said Said.
Said noted that while the layoffs at PT Pakerin could not be entirely mitigated by the government or the KSPI, the company has expressed readiness to continue operations. This is because PT Pakerin still has remaining funds at Bank Prima, valued between Rp500 billion and Rp600 billion, which can be used for operational purposes.
According to Said, the government intends to provide guarantees to PT Pakerin, enabling the company to borrow working capital from banks using the proceeds from the liquidation as collateral. With such guarantees, the government hopes PT Pakerin can re-employ the laid-off workers once administrative issues are resolved.
This solution has reportedly been discussed with the Deputy Speaker of the House of Representatives, Sufmi Dasco, and the State Secretary, Prasetyo Hadi. Said previously mentioned that the President is aware of the layoffs occurring at the paper pulp manufacturer.
To prevent further impact, Said Iqbal has pledged to coordinate with the Directorate General of Industrial Relations and Labour Social Security of the Ministry of Manpower, as well as the East Java Provincial Government, to ensure workers’ rights are protected if layoffs become unavoidable.
The Deputy Chairman of the LPS Board of Commissioners, Farid Azhar Nasution, explained that the revocation of Bank Prima Master’s business licence occurred because the bank faced liquidity and solvency issues, resulting in a negative Capital Adequacy Ratio (CAR).
Bank Prima Master is known to be controlled by Henry Susilowidjojo, Steven Tirtowidjojo, and David Siemens Kurniawan, all of whom are sons of Soegiharto Njoo, the founder of PT Pakerin. David is currently the controller and President Director of PT Pakerin.
In accordance with LPS regulations, banks whose licences are revoked undergo a liquidation process, which includes the execution of deposit insurance for customers. Farid noted that LPS deposit insurance applies up to a maximum of Rp2 billion per customer per bank, subject to applicable requirements.
“In the event that a customer has deposits exceeding Rp2 billion, the remainder depends on the proceeds from the asset liquidation and will be distributed proportionally according to the order of payment priority as stipulated by law,” Farid told CNBC Indonesia on Monday (22/06/202).
PT Pakerin’s funds, estimated to be between Rp800 billion and Rp1 trillion, are currently under OJK supervision. These funds were previously placed in Bank Prima Master, which is undergoing liquidation following the revocation of its business licence by the OJK.