Fadli, Batam – The recent departure of lithium battery maker PT Sanyo Energy Batam (SEB) from Batam, Riau Islands, should become a wake-up call for the government to intensify efforts to improve the investment climate in the industrial region, businesses and workers suggested.Batamindo Industrial Park general manager Mook Sooi Wah said SEB's decision to close down its business, which it claims was triggered by the rising labor cost, indicated that Indonesia should make some improvements to compete with other investment destinations.
"It is getting expensive [to do business in Indonesia] compared to other locations. That's not only because of the labor cost but also other factors, like low productivity of workers, cost of port," Mook told The Jakarta Post.
SEB announced on Tuesday the closure of its production facility in Batam, citing high labor expenditures that led to soaring production costs. The firm, a local unit of Japanese electronics giant Sanyo, opened its production facility in Batam in 1992 and has until now invested US$2 million to support its operations.
Indonesian Metal Workers Federation's (FSPMI) Batam chapter head Suprapto, however, disagreed that the labor cost had become the only factor for SEB to make the decision. "Investors are leaving Batam mainly because of complicated bureaucracy in the region," he said.
The minimum wage in Batam currently stands at Rp 2.9 million (US$222.4), slightly lower than that in the capital city of Jakarta, where it is Rp 3.1 million. The Batam regional administration has recently decided to increase the minimum wage by 8 percent in 2017. (hwa)