Taiwan trade body criticizes RI's labor law
Tantri Yuliandini, The Jakarta Post, Jakarta
Similar to nomads who move once their environment becomes unfavorable, investors from Taiwan are increasingly skipping Indonesia and looking for "greener pastures", a senior official of the Taipei Economic and Trade Office in Jakarta said.
Deputy representative and director of the economic division, Robert S.A. Chang said that in recent years Indonesia had become unattractive to Taiwanese investors, particularly due to the political upheavals brought on by the Asian economic crisis in 1997 and more recently by the increased activities of labor militancy and the introduction of a new labor law.
"Taiwan investors are now hesitant to come to Indonesia because of the 2000 Labor Law ... which we consider is overprotective for workers even when they are in the wrong," he told The Jakarta Post.
According to ministerial decree number 150/2000 on severance and service payments for dismissed and retiring workers, employers are obliged to provide severance payments for dismissed workers, including those who are fired for major violations and crimes, as well as service payments for resigning and retiring workers.
It also specifies the amount of the severance and service payments based on the length of the particular worker's employment.
"The amount is quite significant and would induce workers to deliberately act up so they get fired to get the severance and service pay. This isn't fair," Chang said.
Furthermore, he said that while workers had the right to go on strike, the law failed to stress and uphold the principle that the striking workers must not force other workers to strike with them.
Chang explained that while the law was good in protecting the interests of workers, it had failed to take into consideration the interests of employers, and therefore had only succeeded in deterring new investments from coming in.
He said that now conditions in Indonesia had become increasingly unfavorable for investors, Taiwanese investors were turning to Vietnam where they could achieve the same level of production but without the high risk, he said.
Foreign direct investment from Taiwan totaled US$17 billion with more than 3,000 Taiwanese foreign direct investments, Chang said.
However, since the 1998 crisis, the number of new direct investors had been dwindling. While failing to come up with an exact number, Chang said that only a "very few" investors had come in since last year.