Robert Go, Jakarta – Labour unrest and strikes cost the Indonesian economy up to US$2 billion (S$3.5 billion) last year, analysts estimate.
Hundreds of unions sponsored 250 strikes involving some 100,000 workers last year. They hit hundreds of domestic companies, including kretek cigarette-maker HM Sampoerna, household-appliance manufacturer Maspion, and footwear and apparel producer Universal Utama.
Foreign businesses have also been targeted. British/Australian mining firm Kaltim Prima Coal reported US$50 million in lost sales after a strike at their site dragged on for months.
More recently, strikers have hit Indonesia's important tourism industry, with thousands walking off their jobs at the five-star Kartika Plaza Hotel in Bali on December 18 to demand better transportation allowances.
Hundreds of discontented service workers shut down the five-star Shangri-La in Jakarta on December 22, costing the hotel more than US$5 million so far.
Japan's Sony Electronics moved some of its operations to Thailand and Malaysia after 900 of its technicians walked off in May.
Conglomerate owner Sofyan Wanandi told The Straits Times that the full bill to the country – including lost productivity and the cost of replacing damaged property – is probably around US$2 billion.
He said: "There are conflicting regulations on labour issues. But anarchy is the big problem. Law-enforcement agencies are also slow to react when workers cross the line separating peaceful strikes from criminal behaviour."
Economist M. Sadli, a former Mines Minister under former President Suharto, noted that Indonesia's unions have become more aggressive since the end of the Suharto era. He blames the change on the unions' need to compete for members, dues and financial assistance from international labour groups.
Union leaders like Ms Dita Indah Sari, who spent a few years in jail during the Suharto regime for inciting demonstrations and strikes, insist that worker militancy is justified. "Workers are just beginning to realise that if organised, they can be a formidable political and economic force," she said.
The government is concerned that the labour situation, coupled with political infighting in Jakarta and sporadic social unrest throughout the archipelago, is not only keeping new investors away, but also contributing to the flight of companies from Indonesia.
Said Trade and Industry Minister Luhut Pandjaitan recently: "Some investors have perhaps shifted production capacity – especially in the low-skilled, labour-intensive sectors of garment and apparel manufacturing – to other countries."
Added conglomerate owner Mr Sofyan: "The situation is reaching boiling point. It is still manageable now, but without conscious effort from all sides, conflicts between workers and business interests will