Hundreds of Taiwanese small and medium businesses could relocate their operations here if the government improves its labor regulations, the Indonesian Employers Association (Apindo) says.
Apindo chairman Sofjan Wanandi said the firms were interested in Indonesia because China's new labor law, in effect since Jan. 1, was deemed unfavorable in Taiwan, particularly for labor-intensive sectors.
"These small and medium-scale enterprises are currently facing a lot of legal problems under the new Chinese labor law. As long as we are able to improve our labor regulations, these firms will shift their operations to Indonesia," Sofjan said.
He said the new labor law in China required all labor contracts, even for informal sectors, to be made in formal written statements.
Employees can legally claim double their annual salary if they are made to work without a contract for 12 months.
The law also allows workers or labor unions to file a legal suit for claiming their rights, a decision deemed as a major change from the previous law that shut down any chances for a worker to sue his or her employer.
The association's secretary-general, Djimanto, estimated the Taiwanese firms could invest up to hundreds of millions of dollars in Indonesia.
"They are from labor-intensive industries such as consumer electronics, textiles, shoes and other consumer goods," he said.
In a bid to accommodate the planned relocation, as well as to lure other foreign investors, Sofjan said Apindo was planning to organize a national conference from March 25 to 29 to discuss ways to improve Indonesia's labor regulations.
"The conference will result in a list of recommendations for the government and lawmakers in amending several laws related to labor issues which are deemed unfavorable for the business climate," he said.
The laws include Law No. 3 on social insurance, Law No. 21 on labor unions, Law No. 13 on employment and Law No. 40 on the national social security system.
Sofjan said amendments to the laws would send a positive signal to the international business community.
He added that dozens of South Korean small and medium businesses had begun operations in Bandung, West Java, employing around 10,000 people.
"The Korean enterprises have already invested US$50 million within a few months," he said. (lva)
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