Ina Parlina, Tangerang, Banten – President Joko "Jokowi" Widodo on Monday launched an investment program that will monitor 16 companies in the labor-intensive industry, in an effort to increase employment and boost optimism amid sluggish domestic economic growth.
Under the program, the Investment Coordinating Board (BKPM) will be working together with the companies – mostly apparel, footwear and garment businesses – to ensure the employment of 121,285 workers within the next five years. This year alone, some of the 16 companies have absorbed a total of 26,780 workers.
President Jokowi highlighted the importance of optimism despite the domestic economic slowdown, encouraging the 16 companies to remain upbeat as "there are still opportunities in the country, which we can turn into investment and employment".
"Because with optimism, we will be able to settle the economic problems that are happening in the country," Jokowi said in his speech at the event held at PT Adis Dimension Footwear, a manufacturer of Nike shoes, in Tangerang, Banten, on Monday.
The 16 companies have realized Rp 11.4 trillion (US$789 million) in investment as of September, of the total Rp 18.9 trillion investment estimated for the projects. Eleven of the firms are foreign investors from South Korea, Taiwan, Japan and Singapore.
The companies – five of which are located in West Java and 11 in Central Java – are expected to bring around $1.3 million in export value.
Jokowi also urged businesspeople to consult the government and the BKPM should there be any problem in terms of investment, as well as lay-off issues.
BKPM chairman Franky Sibarani stressed that businesses in the labor-intensive industry played a big role in creating multiplier effects for the country's economy and sparking development in areas surrounding their factories.
"In the meantime, we see some industries, just like the ones present today, still in need of manpower," Franky said. "One of BKPM's tasks is to facilitate existing textile and footwear industries that are facing difficulties."
Labor-intensive industry covers firms that employ at least 200 workers and whose labor costs account for 15 percent of total production costs; they include manufacturers of food and beverages, tobacco, textiles and garments, leather and leather products, footwear, toys and furniture.
Investment in labor-intensive industries trended upward between 2010 to 2014, rising by between 20 to 40 percent annually, with 1,528 projects realized in 2014 making up 15 percent of total domestic and foreign direct investment.
However, industrial growth did not trigger increased labor absorption, which raised concerns among policy makers. In fact the number of workers in the labor-intensive industry dropped, falling from 337,305 workers in 2011 to 203,732 workers last year.
According to BKPM, investment in the labor-intensive industries reached Rp 28.5 trillion in this year's first semester.
In a related development, Jokowi added he had set a deadline of Oct. 26 for the government to wrap up the mechanism allowing investment licensing to be completed within three hours, one of the policies being prepared by the government in the second part of its economic policy package announced last week.
Under the new mechanism, those investing at least Rp 100 billion or employing at least 1,000 workers could see principal business permits, local company deeds and taxpayer numbers issued in three hours if they set up their businesses in industrial parks.