Ministers deny companies relocating their plants
JAKARTA (JP): Minister of Industry and Trade Luhut Pandjaitan denied on Wednesday reports claiming that some export-oriented companies had fled Indonesia in fear of rampant labor disputes.
He said his ministry hadn't found evidence of any company that had decided to uproot its business because of concerns over labor disputes.
He admitted that some industries had diverted their purchase orders to other countries, but that was more due to Indonesia's fragile security conditions.
"That is not tantamount to saying that they (industries) will relocate their operations abroad," he told reporters after a meeting with the Coordinating Minister for the Economy Rizal Ramli.
Luhut was responding to local media reports that claimed several export-oriented businesses will relocate their operations to other countries.
These reports prompted Rizal to instruct Luhut and the Minister for Manpower and Transmigration Alhilal Hamdi to address the problem.
"Actually, companies have only questioned them (security problems)," Luhut went on.
He said he would arrange a meeting between the provinces police chiefs and industrial associations to discuss security issues.
Separately, Manpower Minister Alhilal denied the same claims about aggressive labor unions driving out the country's textile and shoe companies.
"What's happening is a relocation of job orders, not the companies," he was quoted as saying by Antara.
He said that for example the shoe industry was relying on job orders for its continuing operation.
If owners of shoe brand names like Reebok, Adidas, Nike relocate their job orders to shoe factories in other countries, Indonesian shoe factories would have to shut down.
Alhilal cited for example the closure of the Kong Tai Reebok factory, which was shut down when it no longer received job orders.
He said the high import contents of the local shoe industry further discouraged the placement of new job orders here.
Even a weak rupiah, he said, did not guarantee the shoe industry's competitive advantage. Eighty to 90 percent of the industry's raw materials are imported, he explained.
The textile industry, he added, spent 80 percent of its costs on imported raw materials, with the remaining 20 percent spread over electricity, fuel and wages.
However, he also urged labor unions and companies' management to remain cool headed when involved in disputes.
"Strikes must not become a tool to force one's opinion, while companies' management should take a better look at Law no 21 on manpower instead of dismissing employees or rotating their positions," he said.
Meanwhile, the Indonesian Footwear Producers Association (Aprisindo) denied rumors that several foreign companies have relocated their operations to Vietnam.
According to Aprisindo chairman Anton Supit, these companies had only canceled new investment here.
But he added that the cancellation of new investment here had cost Indonesia thousands of new job opportunities.
Chairman of the Indonesian Chamber of Commerce (Kadin) Aburizal Bakrie said that with the Asean Free Trade Area (AFTA) nearing, it would soon become easier to switch production sites.
"With AFTA, the location of factories within ASEAN does not matter anymore because products can freely enter any country," he said referring to the Association of Southeast Asian Nations (ASEAN).
He said that Indonesia must work hard to retain its industries and attract new investment.
ASEAN member countries have agreed to establish AFTA by the year 2003.
The Pharmaceutical and Health Workers Union blamed the lack of investment in Indonesia on the country's political and legal uncertainties.
"The labor movement in Indonesia has not reached a critical level yet, because it is still struggling for basic demands, and trying to uplift workers' welfare from a state of slavery to a more human condition," the union said in a press statement. (bkm/rei)