Rizal urges action to prevent industries from leaving RI

JAKARTA (JP): Coordinating Minister for the Economy Rizal Ramli has asked the related ministries to take immediate action to prevent foreign electronics and shoe manufacturers from leaving the country.

Rizal said on Tuesday that he had instructed Minister for Industry and Trade Luhut Pandjaitan and Minister for Manpower and Transmigration Alhilal Hamdi to address the problem.

"I have asked the minister for manpower to meet with the heads of labor organizations to come to an understanding that will satisfy both investors and labor unions," Rizal said following a meeting with the House of Representatives' special committee for the amendment to the central bank law.

Rizal was responding to newspaper reports that a number of major shoe and electronics manufacturers were considering moving their operations out of Indonesia on fears of labor disputes.

Fifty textile companies were reported to have already moved part of their production activities to Vietnam and Cambodia.

Secretary-general of the Indonesian Footwear Association (Aprisindo) Djimanto said that most of the foreign shoe manufacturers were no longer interested in establishing new investments here.

He said foreign investors feared they would be unable to meet orders because of the uncertainty in deliveries.

Aside from the frequent labor conflicts, political instability has caused several large companies to stop expanding in Indonesia.

According to him, because of their more disciplined workers, Thailand, China and Vietnam are currently favored for investment.

He criticized the Indonesian labor movement as too unruly.

Since the reform era in 1998, local labor organizations have instigated numerous strikes and demonstrations against local and foreign companies.

When negotiations falter, most labor unions resort to strikes to force the management to bow to their demands.

Before they would have risked confronting the police who were less tolerant of protesters.

But Rizal added that the workers would suffer the most if strikes and demonstrations prompted foreign industries to abandon Indonesia.

"If investors leave Indonesia, the ones loosing their jobs are the workers," he said.

Rizal said that some foreign investors preferred to move their operations out of Indonesia because their companies here still depended heavily on imported material for production.

The shoe industry, he said, provided Indonesia with an added value of only between 5 percent and 10 percent because of its high dependence on imported raw material.

"So even with a minor labor problem, they (investors) prefer to reallocate," he explained.

Rizal also said that locally made spare parts should be made more attractive to investors in order to reduce the country's dependence on imported ones.

According to him, improving the quality of locally made spare parts would help encourage investors to retain their operations here. (bkm)