Thursday, 28 February 2013


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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