Fadli, Batam – At least 2,670 workers at foreign investment company PT Nasional Garment Bintan (NGB) in Riau Islands province face layoffs after the firm decide to close, saying local policies were not foreign-investor friendly.
The workers will be laid off in stages over the next two months, management told the Bintan regency administration, Bintan Legislative Council and Bintan Industrial Estate (BIE) on Friday.
BIE managing director Jamin Hidayat told The Jakarta Post in Batam that PT NGB, which is owned by Hong Kong investors, was just one of six foreign companies that planned to close up shop in Bintan.
He said PT NGB's shut-down was caused by various factors, including government policies that had not been conducive to investment, he said. Jamin said that unpredictable wage increases had been one problem, as was the 40-hour workweek and payment of over-time to workers.
He said that the average workweek was more than 48 hours in most Asian countries and that the policy was pro-worker and anti-employer.
"The tax system and the scale of hikes in fuel prices for industry are also difficult to calculate. The business friendly policies promised by the government for the special economic zones like in Bintan have not been realized," Jamin said.
Moreover, PT NGB faced fierce competition on the global market for similar products, especially in the American market, he said.
"The investors said that the global competition can been handled if the investment situation supports them," Jamin said, explaining that the layoffs would be settled amicably with the workers. Negotiations were being held and PT NGB promised to meet all the workers' rights, he said.
Jamin further explained that PT NGB constituted the largest tenant at the industrial estate. The company started its garment business on the island in 1995 by leasing 10 factory buildings in the 325-hectare area.
"We've done our utmost effort, giving discounts and other facilities, to ensure investors to stay in Indonesia, but as it deals with a government policy, we cannot do more than that. The stoppage of operation (by PT NGB) will have a great impact on our incomes," he said, adding that the closure had cut revenue from income taxes from thousands of workers as well.
Jamin said it was likely that the other five foreign investment companies would also close.
"Representatives of the five foreign investment companies have informed us their plans to stop operation. We therefore urge the government to take the initiative to settle the problem as soon as possible," he said.
PT NGB's closure will cut the number of workers employed by 26 foreign investment companies on Bintan island from 15,000 to 11,000, Jamin said. The companies deal mainly with the production of garments and electronic devices.
Meanwhile, a Bintan Legislative Council member, Timbul Sianturi, said the problem lay with the Indonesian government and not the local administration.
Timbul urged the government to issue a legal umbrella for the special economic zones in Batam, Bintan and Karimun.
"The investors are waiting for such a policy from the government for the sake of the future of their operations. The President should not hesitate here because the longer he takes, the bigger losses the government will incur," he added.