Over the year it seemed apparent that Direct Investment process in Indonesia was most heartening. Of the targeted Rp 211 trillion, lit wag
predictably surpassable to around Rp 300 trillion. This was
based on the calculation that every quarter,
direct investment was predictable at
Rp 75 trillion to Rp 80 trillion.
The question was would the good performance in investment this year continue next year? I As known. There would be a series of plans to be implemented next year; one of them was the increase of basic electricity tariff (TDL). In addition to that, toward year end of 2012 there were demonstrations by
workers which tend to be anarchic in
some industrial zones.
As known, the plan to increase electricity tariff for 2013 was already approved. Players of
industry expressed their grievances
over Government's policy which they rated as being
unpopular. The point was that next year, a number of tariff increase would be exercised simultaneously and such was a burden for
industry and business players.
Some big industries even planned to walk out
of Indonesia and relocate their industries to Vietnam, Bangle Dash, and Malaysia. One of the causes was the plan to increase electricity tariff (TDL) proposed
by the Government through RAPBN State Budget 2013. Among the industries
to walk out were footwear, garment,
electronics etc. Some automotive producers even planned to relocate their factories to Thailand.
Word was out they could not stand it any longer
being tormented by various tariffs. Beside increase tariff of electricity and
gas, they were also burdened by Provincial Minimum Wages (UMR). In addition to
that, amidst increase of various tariffs, they believed the Government remained to be permissive to imported products
that stormed Indonesia.
Furthermore,
industrialists and businesspeople pled
that increased price of electricity not be generalized at 15%. The increase must be adjusted to subscribers’ capacity. In a discussion between
businesspeople and the Government,
businesspeople pled increase of TDL
in the industrial and small business (UMKM)
sectors not be fixed at 15% but only 10%. The reason was that if TDL increased were fixed at 15% for small industry (IKM) and small business
(UKM) it was feared that their
business would be injured or they
might even go bankrupt.
Business people believed that should not simply try to be popular in the eyes of the public but sacrifice business people’s interest at home so many
industries were unable to
compete at the local market, not to mention in overseas market. If business
people’s voice ware unheard, they were considering to lock out their factories nationwide.
The threat was
also triggered by the fact that the
Government and the judicative were unable to enforce law especially in controlling workers’ demonstrations which tend to be anarchic lately. For
that matter they urged the Government
to give security assurance to the industry in line with acts of intimidation and threat by demonstrators.
Not just strike
and demonstrations, workers mobilized by certain
labor unions were doing anarchic
acts which stagnated factory operations or even stopped them completely. Unless there was firm action by the Government, locking out of factories at
national scale as last resort would be Inevitable.
So far there was never any firm action by the Government and law enforcers on workers’ demonstrations whose actions disturbed peace and order
and disadvantaged companies in Indonesia. Supposedly there was serious effort
to enforce law on anarchic workers who clearly broke the law.
It was reported that some industries were planning to relocate their factories, among them were garment industry, footwear, electronics, heavy equipments and food and beverages. Workers’ uproars were developing toward criminal act. Strangely
security forces did not do
anything to stop them. The situation tend to trigger
horizontal conflict and might lead to chaos,
such as conflict between workers who were
complaining against the communities who felt disturbed by the riots.
Furthermore the impact of legal uncertainty was felt in labor intensive activities. The restless atmosphere also discouraged companies to expands business. Since October 2012, there were already
six companies which closed and relocate their business oversees, all were on account of legal uncertainty
and poor security assurance. The companies which relocated their business were from Central Java and
East Java, four of which were foreign
companies.
Textile producers united in the Indonesian Textile Association (API) stated, security uncertainty and legal uncertainty was a threat to Indonesia’s
economy. If many factories were
closed, it would mean increased unemployment
which would be the root of problems.
Companies closed their factories not Just by order of the association, but because they felt
there was no security assurance and
no legal certainty. Supposedly the Government was
consistent about striving to increase employment
to implement the pro-job principle. The uncertainty of security and legal assurance indicated that the Government was net supportive to the overall plan to increase
employment.
Strike which were
often lanced launched by labor unions or sweeping of factories were truly
unfair and unethical especially in times
when Indonesia were in the effort to
drum up foreign investors. It would be impossible for this nation to
attain the targeted investment unless
supported by healthy investment climate.
The economic machine would be stagnated if investment were stuck.
Therefore, workers must contribute to
the effort of creating a conducive invest, merit climate. Obviously
sweeping end intimidation by labor
unions lately posed as disturbance to 150 companies in Bekasi. Activities of
150,000 workers were held back - acts of
sweeping had affected performance of labor intensive
projects.
The Indonesian
Footwear Association (Aprisindo) estimated there were 600,000 workers in the footwear industry who were threatened by discharge in the event that national lock out
actually happened. Some shoe factories already closed since the climate was not conclusive to activities. The
number of workers in the footwear
industry was posted at 600,000 people
and they were threatened by dismissal
if national lock out actually happened.
The number of people to be victimized by lock out were not just 600,000
workers but also their families and
surrounding communities like restaurants where the workers eat. The option of walk out had to be taken because so far Cher was no security assurance and loyal certainty by the Government. It was herd for the shoe producers to comely with
workers’ demand because the
characteristics of footwear industry
was high volume, low margin.
Relocation of factories was also necessary if production climate was not healthy. It was impossible for companies to stay in Indonesia if
productivity were low. The export target of
shoe industry which was worth USD 5 billion would
this year not be met. This was on account of unfavorable domestic condition and miserable world's economy. The most fearful
thing was that factory lock out would be done by a combination of 23 local
factories of law enforcement was not exercised by the Government and law
enforcers.
On the other hand, the Government through the Minister of Labor and Transmigration Muhairnin Iskendar
had asked Governors and Provincial Remuneration Board (Depeda) to speed up discussions on stipulation of Minimum Provincial Wages (UMP) 2013.
Based on data up to November 3, 2012, there were only six provinces who had stipulated UMP 2013, i.e. Papua, Bengkulu, Bangka Belitung, North Sumatra, South Kalimantan, and West Kalimantan. For UMP 2013, the Province of Papua had stipulated Rp 1.79 million, Bengkulu Rp 1.2 million, Bangka Belitung Rp
1.266 million, North Sumatra Rp 1.305 million, South Kalimantan Rp 1.337 million, and West Kalimantan Rp 1.06 million.
Minister Muhaimin had also asked the Governors of Greater Jakarta, West Java and Banten to immediately stipulate and synchronize UMP 2013. Synchronization and alignment was necessary so UMP 2013 could be mutually agreed upon so employer-employers frictions could be eased,
Stipulation of UMP 2013 must consider various conditions. However, for common interest stipulation of UMR 3013 mast be immediately realized so it could be exercised by all related parties,
especially employers and workers. The
stipulation of minimum wages was not only a matter of reference to the components of decent living (KHL).
Ideally, based on Ministerial decision Kepmen 226/Men2000 Minimum Regional Wages was stipulated by the Governor in 6.0 (sixty) days et the
latest before effective date of UMP;
meanwhile minimum wages for regencies cities was stipulated 40 (forty) days before effective date of minimum wages of Regencies/cities i.e. on January 1 next year.
After the Permenakertrans Regulation No. 13/2012
there were other variables as benchmark in stipulating UMP, i.e. productivity,
economic growth, condition of labor market and the least capable business,
workers welfare etc. Even the inflation and incentive factor and housing and transportation
incentives for workers might be considered thoroughly so laborers’ wages could increase significantly.
Dissecting and stipulation of UMP/UMK was recommended by the Remuneration Board in the respective regions consisting of representatives of
labor unions, businesspeople, the
Government, experts, observers and academicians. In stipulating UMP/UMK, the Regional Remuneration Board were running market research an prices of 60 components of decent living (KHL). Thereafter they formulated
prepositions, set forth recommendations
and consideration to the Governor/Regent/Mayor in
stipulating minimum wages. Recommendations made by
the Remuneration Board must serve as reference
in stipulating minimum wages in each region.
As soon as UMP 2013 was stipulated, there would be massive illumination to inform stakeholders of industrial relationship on the size of minimum wages; and all parties were expected to comply to the rules on minimum wages and to synchronize
properly and consistently.
From the above picture it was visible that next year the prospect of investment might not be as
bright as this year unless the
plan to increase electricity tariff end laborers
uproar be tackled the elegant way to create investment
climate which was conclusive to growth and stable
whereby to create investment friendly climate.
Business New - November 14, 2012
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