S

everal foreign investment (PMA) companies will stop operating in Batam, Riau Islands province, due mainly to a drop in orders and escalating operational costs.

One of the companies is PT Exas Batam, a PMA firm from Japan that has been in business at Batamindo industrial estate for 15 years.

The firm, which produces metal stamping, car audio and disc drives for computers, stopped operating on Dec. 30, 2011.

The company, which was set up with a paid-up capital of about US$5 million, once employed up to 2,000 workers during its peak, but the workforce had dropped off to only 170 at present.

Head of the Investment Coordinating Board (BKPM) in Batam, Yayan Akhyar, admitted Monday that the company was technically closed already due to the absence of orders.

Administratively, however, PT Exas has not sent any proposal for the closure of its operation to the BKPM office.

“We will contact the management of the company next week in connection with the closure plan in Batam. For any stoppage of operation, the company has to send a proposal to deal with liquidators, termination of workers and other issues,” Yayan said.

Yayan also said that BKPM would check information about plans for the closure of several other companies in Batam. Two other companies intending to close their operations in Batam are PT Nutune and PT Panasonic.

No executives of PT Exas, PT Nutune or PT Panasonic were willing to comment on their closure plan as of Monday.

Coordinator of the Federation of Indonesian Metal Workers Unions (FSPMI) Suprapto said that he had been informed about the closure plan by working unit representatives at the three companies.

FSPMI is now monitoring negotiations for work termination between management and workers.

PT Nutune is a foreign investment company from Singapore, which produces semi-conductors, while PT Panasonic from Japan assembles electronic components for its group companies.

Out of 60 companies operating at Batamindo industrial estate, FSPMI has representatives at 30 firms in the area.

Any problem related to manpower is also reported by the worker representatives to FSPMI to get support in their negotiation process, Suprapto said.

“PT Nutune and PT Panasonic will officially stop operations in 2012. This information has been given to us by our representatives at their respective offices,” he said.

Suprapto confirmed that the closures were caused by both the drop in orders and skyrocketing operational costs, compared with other countries.

“The Free Trade Zone regulations promised by the local administration have not been able to reduce operating costs,” he said.

“During the negotiations, we struggle not only for workers’ rights like severance pay but also ask the companies’ management to give the workers long service pay,” he added.