Nov 8, 2012

Indonesia - Workers' welfare is government's top priority: Indonesia vice president

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Indonesia Vice President Boediono has thrown his support behind wage increase demands by labour unions, which have intensified in the last few weeks.

"Improvement in the welfare of our working population is one of the government's top priorities," Boediono said in his keynote speech during the first Indonesia Investment Summit in Jakarta yesterday.

At least six provinces in the country have agreed to increase the regional minimum wage for 2013, with 27 others expected to follow suit, following strikes and protests by labour unions throughout the country.

Boediono urged businessmen and prospective investors to understand the labour movement's demands for better pay and work conditions, which he argued as the fruit of the country's maturing democracy.

"We all should respect it [the labour movement] accordingly," he said.

Boediono described investors and businessmen in the country as "the goose laying the golden eggs", heaping praise on them for the important role they play in Indonesia's economic performance and who must be protected for the sake of the economy.

However, he argued that the "goose" should not be the only one enjoying the benefits of the golden eggs.

"Let us also make sure that the benefits are shared fairly among those who have contributed to the laying of the golden eggs," the vice president said.

"It is in the best interest of all to strike an appropriate balance between ensuring business activities prosper and enhancing the welfare of the working population — one cannot have one without having the other," he added.

Speaking to investors attending the summit, Boediono reaffirmed the government commitment to "systematically improve the business and investment environment" in Indonesia, a country that has recently become the new darling of overseas investors due to its stable economic growth, growing middle class and young demographic workforce.

The two-day summit, held by the Investment Coordinating Board (BKPM) and the first event of its kind in the nation's 67-year history, attracted more than 500 participants from 29 countries, exceeding the board's initial target of 300 participants.

"The response is well beyond our expectations," BKPM Chairman M. Chatib Basri told reporters on the sidelines of the summit.

"It really reflects the enthusiasm of investors toward Indonesia — this shows that Indonesia is back on the radar screen."

Besides holding closed-door meetings with prospective investors, the BKPM also held panel discussions, with invitations to top government officials as well as analysts from international organisations such as the World Bank, McKinsey & Company and Moody's Investors Service. The meetings gave insights on investment opportunities in the country and the medium-run forecast of Indonesia's economic sustainability.

Analysts agreed that, despite slowing down to 6.17 per cent in the third quarter, Indonesia's economy would retain its six-plus per cent of economic growth in the medium- and long-term due to strong investment growth, as well as its consumption-driven economic model, which has proven resilient against the global downturn.

To ensure Indonesia remains the best bet for investments, they also said that Southeast Asia's largest economy needed to resolve the ongoing dispute between workers and businessmen, which may prompt concerns among investors about the safety of establishing business in the country, among other issues such as improving its infrastructure and eliminating the burden some fuel subsidies.

"I believe that labour issues have recently become more prominent it is important to settle the labour issue because obviously it will affect the investment climate," said Stefan G. Koeberle, World Bank country director for Indonesia.

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