Nov 6, 2012

Indonesia - Indonesia's foreign investors may 'relocate'

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At least 10 companies are considering closing their businesses in Indonesia and relocating to other countries unless the government settles several labour issues that they claim hamper the investment climate, according to an influential business association.

Chairman of the Indonesian Employers’ Association (Apindo) Sofjan Wanandi said the foreign investors’ plan was apparently driven by legal uncertainties from labour issues.

He said Apindo had asked those businessmen to delay their moves pending the outcome of Apindo’s lobbying of relevant authorities to solve the problems within two months.

“Many other foreign investors will certainly follow suit if the 10 companies relocate to other countries. This will certainly have serious negative impacts on the foreign investment climate in the country and on unemployment,” Sofjan said at a seminar on job security in the outsourcing system on Tuesday.

In total, those 10 companies employ no less than 10,000 workers.

Sofjan declined to identify the 10 foreign investors and the amount of their investment in order to avoid any serious problems in their connections with banking partners in the country.

“We have asked them to suspend the relocation and give Apindo two months to lobby the relevant authorities to cope with the problem. If the condition remains unsettled and uncertain, we will give up and the relocation will be unavoidable,” he said.

Sofjan said several investors had locked up their factories and several others had laid off their workers following the national strike on October 3 in numerous industrial estates nationwide.

According to him, many employers, including the 10 foreign investors, could not accept intimidation carried out by labour unionists at factories that banned their workers from joining the strike.

Hundreds of factories in 40 regencies and municipalities, including Jakarta, Bekasi, Sidoarjo and Batam, had to suspend their operation as their workers were forced to join the strike in their opposition to outsourcing practices, cheap labour policies and national social security programmes, causing investors to lose millions of working hours and to suspend export and import activities.

In addition, Sofjan said Apindo and employers would legally challenge the Manpower and Transmigration Minister Muhaimin Iskandar if he went ahead with his plan to issue a new ministerial decree to limit outsourcing only to catering, cleaning services, driving and supporting services at mining sites.

“If the minister issues the decree, he would breach the 2003 Labour Law. It shows that he does not understand outsourcing,” said Sofjan.

He added that the 2003 Labour Law neither mentioned outsourcing nor limited the number of jobs that could be outsourced.

Endang Susilowati, head of Apindo’s advocacy and public policy division, concurred and said it would be impossible to end outsourcing, which had provided advantages to both investors and workers.

National Workers Union deputy chairman Djoko Heryono said the manpower and transmigration minister should revoke the 2004 outsourcing ministerial decree and enforce the Labour Law, which had clearly served to regulate outsourcing.

Ridwan Max Sijabat

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