Amahl S. Azwar, Jakarta – One of the country's oldest foreign investors PT Sepatu Bata, the makers of the well-known footwear brand Bata, says it may move its operations overseas after a series of violent labor disputes.
External union organizers at the company's factory in Purwakarta, West Java, have on several occasions sealed the doors of the plant and refused to allow people to leave.
Such incidents have not been exclusive to the Swiss-based company, whose products have been beloved by Indonesians for generations.
The Japanese connectivity component maker PT Japan Solderless Terminal Indonesia said it lost US$6 million between January and October after external union organizers "attacked" their factory in Cibitung, Bekasi, West Java.
The disruptions that have plagued the firms are two examples of a host violent labor actions that have occurred in Southeast Asia's largest economy since the start of the year. The incidents have tarred the perceptions of investors of the nation's impressive economic growth in the past five years.
Criticizing the "lackluster" response of the government and the police, business representatives disclosed plans on Wednesday to relocate plants overseas, risking at least 10,000 local jobs.
"Our regional office in Malaysia has considered relocating our plants after continuous intimidation from labor organizers outside the firm," Sepatu Bata director Fabio Bellini said.
"Last month, hundreds of our workers were locked inside the factory by union members until the next morning. The police, somehow, were unable to act," he said. The company shut down production after the incident, temporarily laying off around 600 workers, Bellini said.
Indonesian Employers' Association (Apindo) chairman Sofjan Wanandi said that one locally owned and five foreign owned companies had permanently shut down operations due to prolonged labor disputes. Four other multinational companies are expected to follow suit, Sofjan said, declining to name the firms on concerns for their bank financing.
"The estimated investment loss may just reach more than US$100 million," he said.
Japan Solderless human resources manager Mangasi Simanjuntak said that the company might postpone its planned investment in Indonesia if security did not improve.
"One of our workers suffered a miscarriage during the attack by members of the outside labor organizers," Simanjuntak said. The company employs around 1,400 workers.
David Yaori, the managing director of China-based chemical company PT Dharma Guna Wibawa, said that the company had "had enough" of intimidation on the part of union organizers. He said that several of the firm's managers were detained by union organizers in October.
"We have decided to move our factory to Malaysia," he said. The company employs around 400 workers.
Indonesia has been struggling to lure more foreign direct investment (FDI) to maintain economic growth rates that have exceeded 6 percent for the last several years amid sluggish exports that have gradually shed growth.
FDI in the nation has grown by an average of more than 20 percent on a quarterly basis, luring labor-intensive powerhouses, such as Taiwan's Foxconn, which recently announced plans to set up a major manufacturing facility here.
However, the recent labor incidents have frightened foreign investors, which may endanger efforts to reduce the nation's exceptionally large unemployment rate.
According to the Central Statistics Agency (BPS), around 41.4 million people, or 35 percent of the 118-million-person strong workforce, are actually categorized as open or half-unemployed workers.
While the government has insisted that the nation's unemployment rate was only 6.14 percent of the workforce, that figure excludes the half unemployed.
Separately, Apindo deputy-secretary-general Franky Sibarani, said that 23 business associations comprising around 1,000 companies have threatened to halt production if the situation persisted.
Apindo, he said, would wait for talks with the government to conclude before taking radical measures.