APINDO: INCENTIVE IN THE LABOR INCENTIVE SECTOR NOT FULLY BENEFICIAL

Eighty companies in the labor industry sector would have extra facilities in the form of incentives to prevent mass dismissals as economic condition was uncondusive today. The Government had list­ed the companies to be given incentive as promised. This incentive giving was rated as positive, which was expected to take industries out of trouble. The Government was also expecting labor intensive com­panies from Japan in Indonesia to increase. The type of industries were mostly producers of capital goods like telecommunication, automotive, electronics and machineries.

Meanwhile business circles confirmed that the incentives given by 80 labor intensive industry companies which was intended to help company's cash flow had not been fully beneficial. Chairman of APINDO Sofjan Wanandi stated in Jakarta on Thurs­day [24/4] that most of the companies receiving in­centives were shoe and textile producers the rest, like toy and furniture industry were less numerous.

Sofjan disclosed that businesspeople were reluctant to ask for incentives because while it was not too beneficial - the prerequirements for it was hard. Sofjan described that in the Regulation of the Ministry of Industry on Definitions and Industrial classification of Certain Labor Industry it was stated that the industry must employ at least 200 workers. Furthermore the portion of labor in production cost was at least 15%. The labor intensive industry con­sisted of six type of industries, among others: food & beverages, tobacco, textile and garments; leather and leatherware, footwear, toys, and furnitures.

Sofjan disclosed further that by year end 2013, the Government offered conveniences for labor intensive industry. Incentive was given to com­panies being troubled by Increased Minimum Wages [UMP]. increased energy cost and depreciation of Ru­piah. The incentives given were in the form of reduc­tion of income tax, tax cuts and exemptions, and tax holiday.

In giving incentives, the Ministry of Industry came up with some recommendations such as: ex­port or domestic market orientation, and company's commitment not to make lay off. However, as time went by, the companies being given facilities did not feel any significant benefit.

Meanwhile according to Haryadi B. Sukamda­ni, Chairman of DPN Apindo Remuneration and Social Assurance Section, the so many confusing Govern­ment rules in Labor were the root of problems that burdened the businessworld. He said that the Gov­ernment was always reactive to all the outburst in labor business by issuing unsound rules which were confusing and incomplete.

The rules, he said, posed as boomerang which was disadvantageous not just to businessplay­ers but also to the workers themselves which in the end had its negative effect on national development.

He pointed out at some rules which disadvan­taged new job seekers, i.e. restriction of outsourc­ing and also rules on Increased Minimum Wages. He suspected that in making those regulations, the Government had not made many in-depth survey about company's capability based proper parameter. (SS)

Business New - April 30, 2014