Archipelago

Businesses expected to
stay in W. Java, despite
wage increase

The West Java administration is hoping that garment industry executives will not relocate their businesses to other provinces after the local minimum wage goes up in 2013.

The administration’s comments apparently contradicted Indonesian Textile Association chairman Ade Sudrajat, who said that at least 50 garment companies in West Java would likely relocate to Central Java due to a minimum wage for 2013 that was described as “too high” and not competitive.

The companies planning to move are located in areas that have approved significant increases, such as Bekasi, which will raise its monthly minimum wage from Rp 1,470,000 (US$ 152) to Rp 2.1 million for 2013; Bogor municipality, from Rp 1,174,200 to Rp 2,002,000; Bogor regency, from Rp 1,269,320 to Rp 2,002,000; and Karawang regency, from Rp 1,269,227 to Rp 2 million.

Ferry Sofwan Arif, the head of the West Java Industry and Trade Office, said that he has offered to relocate the disaffected business to other regions in the province with lower minimum wages.

“In the eastern part of West Java, for instance, the monthly wage is still below Rp 1 million,” Ferry said.

Ferry said that Majalengka regency would also be a good place for the businesses, since the development of the region would be integrated with the construction of the West Java International Airport.

“The minimum wage there is around Rp 850,000,” he said.

According to the report compiled by the Industry Ministry and the Trade Ministry between 2008 and 2009, Majalengka was a good location for industrial development, Ferry said. The provincial administration is currently building three turnpikes to improve connectivity in Majalengka.

Separately, West Java Manpower and Transmigration Office head Hening Widiatmoko said that the office had yet to receive a proposal from businesses to postpone the wage hike, which must be received by Dec. 21, or 10 days prior to the start of the wage increase.

However, Hening said that he heard that at least 100 firms, most in the textile and garment industries in Karawang, Bekasi and Bogor, would soon submit such proposals.

The proposals must meet five requirements, Hening said, including the submission of corporate financial reports for the past two years and an letter of approval from the appropriate labor union.

“The agreement from the labor union is usually hardest to get. Without the agreement, the application is hard to meet,” Hening said.

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