Two Japanese Automotive Giants to Exit Indonesia Amid EV Policy Shift, Thousands of Jobs at Risk

Two Japanese automotive component factories in East Java are planning to relocate to Vietnam, potentially triggering mass layoffs, according to Said Iqbal, Special Advisor to the President on Labour Affairs. The companies, referred to as PT J and PT S, are shifting their production focus to electric vehicles (EVs) and find Indonesia’s EV policies uncompetitive compared to Vietnam’s. “The principal company in Japan intends to move production to countries that are more productive and will focus on electric vehicles, with development taking place in Vietnam, not Indonesia,” Iqbal stated during a virtual press conference on Sunday. He noted that thousands of workers could be affected by the resulting layoffs.

In a separate case, PT Pakerin, a pulp and paper mill in Mojokerto, is facing the potential layoff of 2,500 workers. The company’s working capital, estimated between Rp 800 billion and Rp 1 trillion, was held at Bank Prima, which has been liquidated by the Financial Services Authority (OJK). With operations halted and workers already furloughed, the company cannot access the funds needed to pay severance. Iqbal, who also serves as President of the Confederation of Indonesian Workers Unions (KSPI), said an agreement has been reached for severance pay at 1.75 times the statutory rate, but the payout is contingent on the Indonesia Deposit Insurance Corporation (LPS) releasing the frozen funds. He is coordinating with local and central government to expedite the disbursement.