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View all search resultsPotential state overreach rattles private sector confidence
State takeovers, interventions and investments in the private sector as part of a broader policy direction have met with mixed reception, with some cautioning that potential overreach could dampen investor sentiment and the business climate.
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A mackerel sky hangs over high-rises on March 14, 2021, in the Sudirman Central Business District in South Jakarta. (AFP/Adek Berry)
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pledge by President Prabowo Subianto to take over struggling companies, coupled with the expanding footprint of state asset fund Danantara, is stirring unease among private companies and analysts, who warn that deeper state intervention could dampen investor sentiment and weaken the country’s investment appeal.
Speaking before thousands of workers at a May Day rally in Jakarta, Prabowo said the government “is ready to take over” businesses unable to survive and would “defend the workers” if employers were unable to protect them.
“If there are entrepreneurs who give up, don’t worry, our country is strong. Our country will take over. Our country will defend the people of Indonesia,” the President said last Friday.
His remarks came as the government established a layoff task force, an initiative that labor unions have long pushed for following the waves of factory closures and job cuts in labor-intensive industries over the past year.
Said Iqbal, president of the Confederation of Indonesian Trade Unions (KSPI), told The Jakarta Post on Tuesday that the organization had proposed setting up such a task force to help speed up government responses and reduce bureaucratic delays. However, there had been little follow-up until the idea was revived during the Labor Day commemoration.
The initiative has since evolved into a broader body dubbed the “layoff and worker welfare task force”, which combines the KSPI’s initial proposal with the so-called National Labor Welfare Council that Prabowo had planned.
Formed by a presidential regulation, the task force will have the legal authority to coordinate across ministries and intervene in labor issues, including mediating layoffs, reassigning workers and stepping in before companies shut down, according to the All-Indonesian Workers Union Confederation (KSPSI).
