Alfitria Nefi Pratiwi, Jakarta – The Indonesian Employers Association (Apindo) has stated that the uncertainty surrounding the announcement of the regional minimum wage (UMP) for 2026 has led to manufacturing companies choosing to relocate their factories.
"Relocation of our industries is already happening on a large scale," said Vice Chairman of Apindo, Sanny Iskanda, in Jakarta on Tuesday, November 25, 2025.
According to Sanny, relocations are generally carried out by companies originally located in Jakarta, Tangerang, Bekasi, Karawang, and Purwakarta. Sanny mentioned that Central Java is the chosen location for relocation by these companies.
He stated that the trend of moving production facilities continues from previous years. In addition to relocating factories within the country, he mentioned that some companies opt to move abroad.
Furthermore, several companies are relocating from one country to another. "Vietnam is currently saturated, but now they are moving to Cambodia, Bangladesh, and Burma," he added.
In addition to industrial relocation, Sanny is concerned that the delay in announcing the UMP could negatively affect Indonesia's investment climate. Sanny stated that the government focuses solely on attracting foreign investors, yet fails to provide them with business certainty. Consequently, investors will choose other countries to expand their industries.
The Ministry of Manpower is still finalizing the government regulation (PP) regarding the minimum wage for 2026. Minister of Manpower Yassierli revealed that the calculation of the minimum wage for 2026 in the draft regulation does not lead to a single figure.
Yassierli explained that in accordance with the Constitutional Court's Decision No. 168 of 2023, the minimum wage for 2026 will be within a range. "We will delegate authority to the Provincial, City, and District Wage Councils to determine the figure within the range based on the economic growth in their respective regions," he stated in a press conference at his office in Jakarta on Thursday, November 20, 2025.
With this approach, the government hopes to reduce wage disparities across regions. Additionally, the calculation of the minimum wage will also consider the need for a decent standard of living. Yassierli mentioned that the ministry has formed a team to estimate the decent living needs.
The Director General of Industrial Relations and Social Security for Workers at the Ministry of Manpower, Indah Anggoro Putri, added that the range referred to in the minimum wage calculation is the alpha index. Before being added to the inflation rate, Alpha will act as a multiplier on the province's or city's economic growth. Based on Government Regulation Number 51 of 2023, alpha is set at 0.1-0.3.
Indah emphasized that the minimum wage calculation formula remains the same as before, but the alpha index will be expanded beyond the previous range of 0.1-0.3. She stated that the variables in the minimum wage formula remain the same, with slight adjustments to the alpha index in line with the Constitutional Court's mandate. "What are the adjustments? The government must consider the decent standard of living," said Indah to reporters at the Ministry of Manpower office after the press conference.
According to Indah, the minimum wage for 2026 will still be effective on January 1 next year, even though it was not announced on November 21, 2025, the day after. She ensured that the preparation of the government regulation was in its final stages. Indah also claimed that the Ministry of Manpower has discussed the regulation with relevant ministries/agencies, labor unions, and employers.
– Anastasya Lavenia Yudi contributed to the writing of this article