RI told to learn from multinational firms
RI told to learn from multinational firms
JAKARTA (JP): Indonesian companies should learn from
multinational companies in developing human resources, says noted
economist Djisman S. Simandjuntak.
Djisman said yesterday that multinational companies are much
more competitive and efficient than local firms, despite the
expense of better treatment of the labor force.
"We have to learn from them if we want to enter the more
integrated world economy," he said in his comment to the UNCTAD's
(United Nations Conference on Trade and Development) annual
report about multinational corporations, employment and work
places.
According to the report released here yesterday, multinational
corporations now have global sales in excess of US$4.8 trillion,
a larger volume than the world trade.
The number of multinational corporations is rising, with some
37,000 parent firms controlling more than 200,000 foreign
affiliates.
The 100 largest multinational corporations, excluding those in
banking and finance, ranked by foreign assets, held $3.4 trillion
in global assets in 1992, of which about 40 percent were located
outside their home countries, according to the report.
The report also said that the workforce directly employed by
foreign affiliates typically -- but not always -- enjoy better
wages, conditions at work and social security benefits relative
to those prevailing in domestic firms. Those corporations often
provide labor with the opportunity to acquire additional
knowledge and skills, particularly in the case of affiliates
operating in developing countries.
Benefit
Djisman said that workers at host country employers and the
host economy as a whole can benefit from the upgrading of skills
through the employment in multinational corporations especially
in the transfer of skills through formal on-the-job training.
He also called on the Indonesian government to further improve
the business climate in order to attract more multinational
corporations into the country.
"We have to compete not only with China, but also Vietnam and
India to attract direct investments of those companies," he said,
adding that many multinational companies are still reluctant to
enter Indonesia due to its high-cost economy.
Djisman said that in the coming years foreign direct
investment would continue to flow into countries where the
business profitability is high.
The business profitability is not solely determined by low
labor costs but more on the overall economic efficiency, he said,
adding that the business profitability in Indonesia might be
still lower than that in India.
Foreign direct investment in the world increased from $171
billion in 1992 to $195 billion in 1993 but lower than the $232
billion peak recorded in 1990. Developing countries attracted $80
billion, representing 40 percent of the total, with China alone
accounting for $26 billion of the overall volume.(hen)