Taiwan asks RI to fix business climate

A'an Suryana, The Jakarta Post, Jakarta

Taiwanese manufacturing companies are joining calls for the government to improve the investment climate here or more companies will relocate their operations to other countries.

Derek Hsu, the director of the Taipei Economic and Trade Office in Jakarta, told The Jakarta Post on Tuesday that Taiwanese investors had been discouraged by lingering labor conflicts and unfavorable labor rulings.

He said that during the past year, several Taiwanese manufacturers had relocated their operations to mainland China because of the above problems.

Taiwan is the fifth largest foreign investor in Indonesia, with some US$17 billion in investments made by more than 1,000 companies mostly in footwear and textiles.

Earlier, the South Korean Chamber of Commerce (KOCHAM) had also warned the government that more South Korean companies would pull out of Indonesia if the government failed to quickly address the various problem hurting businesses here. The problems mostly centered on labor-related issues such as irrational increases in minimum wages, labor strikes, poor worker productivity and overly protective labor policies.

During the past year, some 35 Korean manufacturing firms had closed their operations here, leaving some 32,000 people jobless, and some 13 others were considering a similar move, KOCHAM said. Some of the factories were being relocated to countries with favorable investment climates like Myanmar and Vietnam.

The Japan External Trade Organization (JETRO) has also complained about the poor investment climate here.

Experts have said that lingering labor conflicts and unfavorable government labor policies had made the products of the foreign manufacturers, which are mostly export-oriented companies, less competitive in the international market.

There have been fears that prolonged labor conflicts would disrupt the delivery of export products.

The steady exodus of foreign investment firms, particularly labor-intensive companies, will continue to create more unemployment, which, according to independent experts has now reached a staggering figure of over 40 million.

Meanwhile, some representatives of various business groups and labor unions have set up a working group to review controversial labor rulings, which according to businesses are overly protective of workers at the expense of employers.

The agreement was reached during a meeting late on Tuesday facilitated by the Crisis Center. Officials from the International Labor Organization (ILO) also attended the meeting, Sofjan Wanandi, chairman of the National Economic Recovery Committee (KPEN) said.

Sofjan said that the working group would try to seek a compromise over controversial articles in the new labor bill. The recommendations of the group would be submitted to the House of Representatives, which is scheduled to pass the bill into law in October.

Among the controversial points in the bill is the requirement for employers to keep paying the salaries of workers who are on strike.