Robert Go, Jakarta – Rising wages, coupled with a hyperactive labour force, are turning off foreign investors, some of whom are packing up and abandoning the country.

To bring back investors, Jakarta needs to better control workers and the rate of pay hikes. Indonesia has simply gotten too expensive.

The investment bleeding is getting worse. Earlier this year, Reebok and Nike announced they would cut orders from Indonesian producers, and lay off between 5,000 and 10,000 workers.

Last week, Sony became the latest major investor to jump ship. It is dismissing 1,000 workers from its West Java factory and will make television and audio sets in Malaysia and elsewhere by next March.

Why is this happening? Some foreign executives say they cannot work with Indonesia's pervasive corruption and weak legal system. Others latched onto security problems to explain the growing allergy investors have to the country.

These are valid observations. To say that Indonesia is corrupt is to understate the problem.

Something as simple as getting parking space in a shopping mall often requires greasing a few palms. Local courts are also notorious for issuing dodgy judgments. And yes, the men in uniforms don't inspire the full confidence of foreigners looking to put down long-term bets, especially in resource-rich outer provinces.

But most foreigners don't talk openly of what is probably the most important reason why they don't like Indonesia anymore: Rising wages and politically-empowered workers.

Admitting that higher payouts mean less profitability and that active unions give executives nightmares are not exactly noble pursuits.

So investors point fingers at corruption and poor security, and argue they are merely maximising efficiency, as they look for greener pastures.

Several alternatives come to mind. China and Vietnam have lower minimum-wage requirements than Indonesia's US$60 per month. Workers in these countries also get muzzled quickly if they act up.

Bangladesh, where the poverty is even deeper and labourers come cheaper – as low as US$20 per month – also stands to gain from Indonesia's woes.

Ironically, democratisation has put Jakarta between a rock and a hard place. And the realisation is beginning to dawn on officials that maybe, the way to bring investors back requires an almost impossible act: Rolling back reforms, slashing wages and cracking down on workers.