LPS to Disburse Severance Pay for 2,500 Laid-Off Pakerin Workers

Special Adviser to the President on Employment and Labour Welfare, Said Iqbal, has confirmed that the Indonesia Deposit Insurance Corporation (LPS) will disburse IDR 159 billion in company funds belonging to PT Pakerin to cover the severance pay of 2,500 workers who were laid off. The funds are currently held at Bank Prima, whose business licence was recently revoked by the Financial Services Authority (OJK). Said Iqbal, who also serves as President of the Confederation of Indonesian Trade Unions (KSPI), stated during a virtual press conference that the liquid funds would be released by the LPS upon the signing of documents by two to three directors of PT Pakerin. He noted that the process is underway to ensure the retrenched workers receive their entitlements. Beyond the immediate severance payment, the government has pledged to provide guarantees to PT Pakerin, enabling the pulp and paper producer to secure bank loans to restart its operations. The government hopes that once operational issues are resolved, the company can rehire the workers who were laid off. The company’s total funds placed in Bank Prima are estimated to be between IDR 800 billion and IDR 1 trillion, with a portion of the remaining IDR 500 billion to IDR 600 billion intended for operational recovery. Said Iqbal added that the solution was discussed with Deputy Speaker of the House of Representatives Sufmi Dasco and Minister of State Secretary Prasetyo Hadi, and that the President has been informed of the layoffs at the pulp producer. To mitigate further impact, Said Iqbal previously committed to coordinating with the Directorate General of Industrial Relations and Labour Social Security at the Ministry of Manpower and the East Java Provincial Government to ensure workers’ rights are protected. The OJK revoked Bank Prima Master’s licence after the bank experienced liquidity and solvency problems, evidenced by a negative capital adequacy ratio (CAR). The bank is controlled by Henry Susilowidjojo, Steven Tirtowidjojo, and David Siemens Kurniawan, the children of PT Pakerin founder Soegiharto Njoo. David Siemens Kurniawan is also the controlling shareholder and president director of PT Pakerin.