Archipelago

Wage, labor issues annoy
investors in Batam

Workers’ rallies, ahead of the 2014 City Minimum Wage (UMK) discussion in Batam, Riau Islands, have raised concern among various parties, especially foreign investors.

The Batam Free Trade Zone Management Agency (BPK FTZ) has received complaints, especially from Japanese investors, on the unpredictable wage increase as well as rallies , which often ended in anarchy, and would eventually cause them to relocate their businesses to other regions.

Director of the Batam One-Stop Integrated Services (PTSP) and BPK FTZ spokesman, Dwi Djoko Wiwoho, told The Jakarta Post on Wednesday that his office conveyed to the consulate general of Japan in Medan, North Sumatra, Yuji Hamada, on Aug. 26, that labor issues in Batam, such as the wage scheme and rallies were the main issue Japanese investors faced.

“The UMK, which is unpredictable, should not be adjusted every year. These issues, according to the Japanese consulate in Medan, have raised the concern of Japanese investors. But, we cannot say how many of them have expressed view,” said Djoko.

He added that he and BPK FTZ marketing and investment director Purnomo Andiantono met Hamada to consult about the evasion of three top executives of PT Sun Creation Indonesia (SCI), a Japanese electronic manufacturing company in Batam in early July.

As a result, the fate of 732 workers the company’s remains uncertain as they have not received their salaries and severance payment.

“Regarding SCI, the consulate general requested Batam BPK FTZ to go to the company headquarters in Japan. We will go to Japan on Sept. 5 to resolve the issue,” said Djoko.

According to Djoko, Japan is ranked third in terms of the highest number of investors in Batam, after Singapore and Malaysia. Batam is home to 65 foreign investors with a total investment value of more than US$132 million.

“The statement is a warning to us all and it should be responded to wisely. We also hope the labor force could refrain from fighting for their aspirations,” said Djoko.

Besides SCI, which closed its plant in Batam, PT Shin-Etsu Magnetics Indonesia has also closed its factory in the Batamindo Industrial Zone in Batam, Riau Islands, as of Aug. 23. It has an investment value of $13.2 million.

The company produces magnetic circuit parts, magnet holders and general magnets. It is a joint-venture between Singapore and Malaysia, with its parent company in Japan.

Separately, Batam chapter Indonesia Metal Workers Federation (FSPMI) secretary Suprapto said his union strongly criticized the limited increase in UMK which would be implemented by the government. He added on Sept. 12 members from FSPMI and other trade unions would take to the streets in response to the wage issue.

“We will mobilize up to 6,000 workers to protest the presidential instruction. Why should the wage increase be restricted? This is inappropriate and the wage issue has always been made a scapegoat in every investment problem, whereas in fact the foreign investors have fled due to high economic costs from illegal levies in lengthy licensing procedure as well as other bureaucratic red tape. The wage scheme in Indonesia is still lower compared to other countries in Asia,” said Suprapto.

According to Suprapto, FSPMI has set the 2014 UMK at Rp 3.3 million ($300), based on the prices of 60 basic needs items as the basis of determining the Decent Living Needs (KHL) and impacts from the fuel price hike of 40 percent.

“If it refers to the KHL based on a survey conducted by the Remuneration Council, it does not make sense. They noted that the 2014 KHL amounts at a monthly Rp 2.1 million, whereas in fact the fuel price increase has a huge impact on workers. We want the 2014 UMK in Batam to be set at above Rp 3 million,” said Suprapto.

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