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High wages still top concern for Japanese companies in Indonesia: Survey
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Workers of PT Astra Daihatsu Motor (ADM), a Japanese joint venture in Indonesia, install parts in a car in the company’s assembly plant in Karawang, West Java, in this file photo. (Antara Photo/Rivan Awal Lingga)
T
he steep increase in the minimum regional wage remains a major concern for Japanese companies doing business in Indonesia, according to a new survey conducted by the Japan External Trade Organization (JETRO).
The survey showed five main problems in investing in Indonesia including a sharp increase in wages (84 percent), difficulty in local procurement of raw materials (54.9 percent), the tax burden (55.4 percent), employee quality (55 percent) and quality control problems (53.6 percent).
The polling was part of JETRO’s survey of Japanese companies’ perception of the business climate in 20 countries in Asia and Oceania, including in Indonesia. The survey compiled answers from 13,458 respondents from Aug. 26 to Sept. 24, 2019. In Indonesia, 614 companies took part in the survey.
“The human-resource-related issues are the main problems, such as those related to wages, employee quality and difficulties in quality control,” said Takenobu Yamashiro, the senior director of JETRO’s office in Jakarta during a press briefing on Feb. 11.
Yamashiro said that wages remained the biggest problem considering that the annual increase in labor costs in Indonesia during the 2013-2020 period was among the highest in ASEAN. Wages in Indonesia are projected to increase by 7.2 percent this year, higher than the 7.1 percent in Vietnam, 5.4 percent in China and 3.9 percent in Thailand.
He pointed out that the percentages of four of the five major problems also increased from the previous year, meaning business conditions in 2019 could be even worse than in 2018.
“The percentage of the five major problems in Indonesia exceeded 50 percent and four out of the five problems increased from the previous year,” he added.
