Wave of Layoffs Threatens East Java as Two Japanese Automotive Factories Plan Move to Vietnam
Presidential Special Adviser for Employment and Labour Welfare, Said Iqbal, has revealed the potential for mass layoffs at two automotive component companies in East Java. The situation is triggered by the parent company’s plan, based in Japan, to relocate production.
Said Iqbal stated that both companies plan to shift their business focus to developing electric vehicle components. Production is subsequently planned to be moved to Vietnam, which is considered more supportive of electric vehicle industry development. If this occurs, thousands of workers will be affected by layoffs.
Although he did not name the companies in detail, Said Iqbal disclosed that the two companies have the initials PT J and PT S. Based on information gathered from trade union circles, the parent company of the two firms assesses that electric car development is more productive in Vietnam. Therefore, the company will withdraw from Indonesia.
“Because in Indonesia, electric car factories are apparently not competitive. But in Vietnam, there is a policy to develop electric car factories. So, these two automotive component companies in Pasuruan and Mojokerto will relocate part of their operations. This is still an initial discussion. Initial information. Thousands could be affected by layoffs,” Said Iqbal said in a virtual press conference on Sunday (21/6/2026).
“So the principal in Japan will move its production to more productive countries and change its product diversification. They will focus on electric cars, whose development is being carried out in Vietnam, not in Indonesia,” he continued.
Said Iqbal, who is also President of the Confederation of Indonesian Workers’ Unions (KSPI), admitted he has asked FSPMI, a union under his umbrella, to discuss with the company to ensure workers’ rights are protected. His party will also coordinate with the central government by providing a direct report to President Prabowo Subianto on this matter. According to him, the problem in this case lies at the level of the central government’s electric vehicle policy.
Layoffs at Paper Factory
Still in East Java, Said Iqbal revealed that a pulp factory will carry out mass layoffs affecting up to 2,500 workers. He admitted he went directly to Mojokerto to conduct an on-site review of the factory named PT Pakerin.
From the review, Said Iqbal stated the company has currently furloughed 80 percent of its workers. These furloughed workers are potentially facing imminent layoffs. Upon investigation, Said Iqbal said that based on information obtained in the field, the company is suspected of experiencing a capital shortage because its funds were deposited in a bank that was closed by the Financial Services Authority (OJK).
Pakerin, said Said Iqbal, has funds stuck in the liquidated bank amounting to around Rp 800 billion to Rp 1 trillion. This capital was supposed to be used for factory operations but cannot be accessed. “The finding is that the 2,500 workers threatened with layoffs is due to capital. PT Pakerin’s capital, based on information I gathered in the field, around Rp 800 billion to Rp 1 trillion of PT Pakerin’s working capital was deposited in Bank Prima. Well, Bank Prima was liquidated by the OJK due to its inability to continue operations,” he explained.
Currently, PT Pakerin’s funds stuck in Bank Prima are being handled by the Deposit Insurance Corporation (LPS). As long as the funds cannot be disbursed, Said Iqbal said the factory cannot operate, and consequently, workers cannot work and receive wages.
On the other hand, the workers have reportedly agreed to be laid off, provided that the agreed severance pay and other rights for workers are fulfilled. “When I asked the employees, what if there are layoffs? They agreed. So there is already an agreement for layoffs, the workers who are no longer working have agreed with the company leadership to receive severance pay 1.75 times the regulation. So 1.75 times the applicable rule. For example, 1 year of service equals 1 month’s wages, 2 years of service equals 2 months’ wages, then multiplied by 1.75 according to the length of service,” Said Iqbal explained.
The problem is that currently, the layoff option cannot be executed because PT Pakerin has not yet obtained its funds. His party is currently coordinating with all parties, from the regional government to the central government, to urge the LPS to accelerate the disbursement of PT Pakerin’s funds stuck in Bank Prima.