Police warn of unrest over Riau layoff
Police warn of unrest over Riau layoff
Haidir Anwar Tanjung, The Jakarta Post, Pekanbaru, Riau
Massive layoffs may occur in the immediate future in Lobam
Industrial Park, Riau Islands, Riau province, as some 40 investors
plan to relocate their businesses to other countries, an official
has warned.
Riau Police chief Brig. Gen. Deddy S. Komaruddin said that the
plan, which would affect 1,200 employees working in the area, was
poised to create social instability in Riau.
"We plan to invite the Riau Island regent to meet us
immediately, in order to anticipate possible riot breakouts in
Riau if the plan is executed," said Deddy on Tuesday.
According to Deddy, red tape and sluggish bureaucracy were
cited by the companies as two factors that had encouraged them to
relocate their businesses from the industrial park.
"We hope that the government can persuade them to cancel the
plan in order to prevent other investors from following suit," he
added. He asserted that the plan was serious.
He said that the plan was divulged to him following the recent
exodus of four companies, two of which were garment and
electronic factories based in Singapore, he said.
The relocation plan was also confirmed by chairman of Riau
Islands Employers' Association Rudy Chua.
He stated that not four foreign companies had pulled their
investment from Lobam Industrial Park, but five.
They relocated to Myanmar, Vietnam and the People's Republic
of China due to the weakness of the bureaucracy in Indonesia.
"Other companies will apparently follow suit. They are upset
at the Indonesian bureaucracy," Rudy said.
He said that illegal charges, for example, were still demanded
when investors tried to arrange permits.
The regional autonomy drive, which began two years ago, has
complicated problems for the bureaucracy.
The regional autonomy, which shifted power from the central to
regional governments, has created more opportunities for regional
governments to produce bylaws that enhanced revenues for the
regions, but at the expense of companies.
The bylaws impose an additional burden on companies,
discouraging new entrants from investing in the regions, while
also discouraging existing investors from remaining there.
The new bylaws created confusion for investors because some of
them were in conflict with regulations issued by the central
government, said Rudy, without elaborating.
"This creates legal uncertainty among investors, discouraging
them from pouring investment into Indonesia," said Rudy.
Another problem concerned wage hikes. After regional autonomy
was implemented, regional governments often upped the regional
minimum wage, adding to the burden on investors.
"The minimum wage in China and Vietnam is much less than it is
in Indonesia. That encourages investors to relocate, as in this
case, from Lobam to those countries," he said.
He added it was imperative that the exodus was stopped because
the total investment in Lobam Industrial Park was quite
significant.
In the second semester of 2001, for example, total investment
in the park amounted to US$350 million.