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n investor in Batam, Riau Islands, PT Panasonic Shikoku Electronics Batam (PSEB), will gradually lay off 3,469 employees over the next 11 months due to flagging orders from the impact of the global financial crisis.

PSEB finance director Hiroshi Mizobuchi told The Jakarta Post on Thursday the company had to reduce its employees due to declining global demand for its products.

PSEB currently employs 6,500 workers at its three factories in Batam.

"The worker layoff was due to a decline in output given the sluggish global market.

It has nothing to do with government policies on the investment climate," said Hiroshi.

According to Hiroshi, PSEB operates two business units producing fluid dynamic bearings and device products, both computer components.

Panasonic has been investing in Batam since 1998, with a total investment value of US$71 million.

Last year, PSEB also closed a factory producing battery components.

PSEB human resource manager Herry Pranata said that only 3,000 workers would remain employed following the gradual layoffs of 3,469 workers, a far cry compared to the 9,000 workers it employed in 2000.

"However, the electronic assembling business is quite dynamic and fluctuating, so we might hire workers if orders suddenly increase," said Herry.

Hiroshi said the declining orders were due to the drop in market demand from PESB's main trading markets in Asia, including Thailand, the Philippines and China.

"The government's policy on the Special Economic Zone in Batam has not made any impact on our company," said Hiroshi.

Batam Manpower Office head Rudy Syakyakirty said his office had received a written report from the PSEB management's about its move to layoff thousands of workers.

"Such a massive layoff would add to the number of unemployed people in Batam," said Rudy.

According to Rudy, based on the number of yellow cards issued by his office, the current number of unemployed people in Batam totals 16,000 people.