Ganjar Pranowo (JP/Suherjoko)

Central Java boasts a combination of cheap labor, excellent infrastructure and investment-friendly regulations to attract labor-intensive investment to the country’s third-most populous province, Central Java Governor Ganjar Pranowo has said.

As labor wages continue to increase in Greater Jakarta, many companies there have decided to reallocate their factories to Central Java, he added, and the trend would continue because the province has always done its best to offer investment incentives.

He cited international shoemaker Nike and Japanese multinational company Sony as a few examples of labor-intensive companies that had opted to move their operations to the province. Boyolali, Wonogiri, Kebumen, Brebes, Purworejo and Rembang are among the growing regencies in Central Java.

“Foreign investment continues to grow in Central Java. This province has become a magnet for foreign companies, because wages here are lower compared to Greater Jakarta,” Ganjar said in an interview with The Jakarta Post at his office recently.

The completion of the 1,167-kilometer trans-Java Toll Road, as well as the rejuvenation of seaports and airports have made the province more competitive compared to West Java and East Java.

“Central Java is very sexy for investment,” Ganjar said.

The 55-year-old governor was reelected for a second term in September last year. He is widely tipped to be a potential contender in the 2024 presidential election, along with West Java Governor Ridwan Kamil, Jakarta Governor Anies Baswedan and South Sulawesi Nurdin Abdullah.

“Now people are very critical of their leaders and don’t hesitate to express their aspirations or dissatisfaction in public — often through social media,” he said.

As the country’s third-most populous province after West Java and East Java, Central Java is an attractive investment destination for the beverage, tobacco, agriculture, wood, printing, apparel, textile, furniture and processing industries, he added.

“There are textile factories in Wonogiri, footwear [factories] in Jepara; that’s why the central government declared us the best in development planning — because of our innovations.”

Apart from textile, the food and beverages processing industries are also growing rapidly. The province has joined hands with Fujian province to develop its fisheries industry.

Asked about the labor movement in Central Java, Ganjar acknowledged that with the presence of major companies, workers have wanted to earn higher wages, like in West Java and Greater Jakarta. He added that Central Java would become uncompetitive if it could not maintain low wages.

The governor blamed Law No. 13/2003 on labor as the main source of conflicts between workers and companies.

“The tripartite is not happy. The government is not happy because of worker demonstrations. Workers are also not happy because they have to go to the streets to voice their demand, while businesspeople are also not happy because they must endlessly negotiate with workers,” said the Indonesian Democratic Party of Struggle (PDI-P) politician.

Ganjar decided to lobby the three parties. He informed the manpower minister that he would not apply the national wage policy in the province because the wage would be too low.

However, the process to determine Central Java’s ideal wage was lengthy and tiring.

“It took a long time. Workers and businesspeople sat down together and the provincial government acted as their facilitator. They discussed and included 40 factors to determine the wage,” said the former House member.

“Was is the ideal wage? If it is too high, investors would be uncomfortable, and they might not be able to pay. So, we must find a middle way. I was initially disliked by labor unions because of my stance,” Ganjar added.

The provincial authorities should be able to provide good infrastructure and eliminate red tape to ensure the presence of domestic and foreign companies, he said.

He acknowledged there were still coordination problems between his office and regents and mayors because regencies and cities are autonomous, he said. It is sometimes difficult for the provincial government to carry out its duties as supervisor because it also represents the central government, he added.

“Most of regulations and investment permits are issued at the level of regencies and cities,” Ganjar noted.

Ganjar also expressed concerns over the slow development of the Kendal Industrial Estate, which is located on the outskirts of Semarang. The industrial compound was jointly inaugurated by President Joko “Jokowi” Widodo and Singapore’s Prime Minister Lee Hsien Loong in November 2016. The 2,700-hectare estate is a joint venture between local industrial estate developer Jababeka and Singapore’s Sembawang Corporation.

“The industrial estate has not grown as expected. It faces a lot problems with land acquisitions.”

Separately, Investment Coordinating Board (BKPM) head Thomas Lembong said Central Java should pay more attention to tourism development because the province had great potential as a tourist destination.

It needs to develop train routes between Semarang, Surakarta and Yogyakarta and Magelang to support local tourism, he added.

“Then we can also build a high-tech cruise ship terminal in Semarang, especially as the cruise ship is growing 15 to 20 percent each year in the region,” Thomas said in a recent interview with the Post.

“Imagine tourists taking a cruise ship to Semarang, from which they travel by train to Yogyakarta or Surakarta, then go back to Semarang to return to their cruise ship.”

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