Jakarta – Associations representing a number of labor-intensive industries, hard hit by the recent labor unrest and intimidation of their workers, are demanding tougher law enforcement measures against illegal actions by unions that have the potential to damage the country's economy.
One business association says it is planning to sue the labor unions involved.
Indonesian Footwear Association secretary-general Yudhi Komarudhin told The Jakarta Post that the violent labor rally on May 3 had made a number of European investors postpone placing repeat orders until they saw whether the labor unrest would subside.
"Up until June, we were actually receiving additional orders for shoes from the European countries to replace supplies from China and Vietnam. However, due to the recent unrest, they have postponed placing more orders," said Yudhi.
Indonesia's shoe industry now has a big opportunity to increase exports to Europe after the European Union imposed antidumping measures against Vietnam and China, whose combined annual shoe sales to Europe previously reached US$2.4 billion.
"Companies from Italy, Britain and France have confirmed that they will postpone orders due to the May 3 incident," he said, without giving the value of the canceled orders. "Local investors who are interested in putting their money into the shoe industry are now also hesitant about proceeding with their plans."
Ernovian G. Ismy, the secretary-general of the Indonesian Textile Producers Association, voiced similar concerns, saying that he had received reports from foreign investors in the textile fiber industry of employees being forced to down tools by union activists.
"We have received reports about such illegal acts from factories in Bandung, West Java." He added that on May 3, 120 factories had to close, with each suffering losses of up to Rp 18 billion ($2 million). He also said that because they had been forced to close, some of the factories would have to delay deliveries.
"Some other firms have had to ship their deliveries by air in a last ditch attempt to meet delivery deadlines. Of course, this costs them a lot more." He added that failures to deliver on time would result in penalties being imposed by buyers.
Yudhi said that the footwear association had received reports that five shoe producers had been forced to halt operations during the labor protests on May 1 and 3, causing them some $1.5 million in losses.
Elsewhere, Ernovian told the Post that his association planned to sue the labor unions responsible for the intimidation of workers at a number of factories. "We are calculating the total losses resulting from this intimidation. We are working together with the Indonesian Employers Association in bringing our actions," he said.
Indonesia's total exports of textile products increased by 10.5 percent from $7.6 billion in 2004 to $8.4 billion in 2005. The association says that exports will further increase to $9 billion in 2006.
Meanwhile, in the case of shoe exports, Indonesia's earnings increased from $1.38 billion in 2004 to $1.5 billion in 2005. For 2006, the association is targeting $2.9 billion in exports, including exports worth $2.4 billion to Europe.