Ominous news for Indonesian labour

“Other major concerns with investors — the country’s onerous labour laws and the “spectre of exorbitant costs” in cases where companies have to retrench — are also going to be addressed,
Pangestu [Indonesian Minister for Trade] said, while still protecting workers’ rights.”

“while still protecting workers’ rights” …. hmmmm

The current minimum wage in Indonesia is set roughly at between Rp800,000 (approx AUD$100) and Rp1.4 million (around AUD$170)  a month. Onerous to investors?

Interview-Indonesia to fix constraints, labour laws (see below)

Interview-Indonesia to fix constraints, labour laws

* Sees quick wins in free trade zones, special economic zones

* Continued emphasis on reform of bureaucracy

* Better logistics will lure manufacturers

By Sara Webb

JAKARTA, Nov 2 (Reuters) – Indonesia will address constraints on
economic growth including problems with infrastructure,
logistics, electricity and labour, in order to attract
investment and create jobs, Trade Minister Mari Pangestu said on
Monday.

Pangestu, a respected technocrat and reformer in the cabinet,
said Indonesia could score some “quick wins” by developing its
free trade zones in Bintan, Batam, and Karimun, near Singapore,
and by setting up new, special economic zones in the next year.

Such zones would enable Indonesia to provide more efficient
services in a few locations initially rather than across the
country as a whole, and to use one-stop processing for exports
and imports.

She also said that the government would continue with its
reforms, for example of the civil service.

“The speed may not be as fast as we would like,” she said, but
“this is irreversible and will get better and better.”

President Susilo Bambang Yudhoyono, who appointed his new
cabinet last month after winning a second, five-year term in
July, is targetting GDP growth of 7 percent or more by 2014, up
from a forecast of 4.3 percent this year.

He is expected to unveil his 100-day economic plan soon, and is
likely to announce measures to speed up infrastructure projects
and push ahead with construction of power plants.

While Indonesia has pulled through the global economic crisis in
relatively sound shape, thanks partly to the fact it is less
dependent on exports than others in the region, it still falls
short of its potential.

Investors frequently cite corruption, legal uncertainty, red
tape, poor infrastructure, and tough labour laws as deterrents,
and say these hold back growth in Southeast Asia’s biggest
economy.

Pangestu said that addressing logistics, such as roads and
transport, would help to attract manufacturers, for example in
the electronics and automotive sectors, as well as in the
textiles and garments industries.

“We’ve seen new investments and existing companies expanding,
using Indonesia as a regional production base,” she said.

“We will see a greater trend in that direction.”

In May, Volkswagen, Europe’s largest car-maker, announced an
agreement to assemble Tourans compact minivans in Indonesia.

Pangestu said that the government would be focused on
infrastructure investment, and in particular, making sure that
electricity supplies improved, by ensuring that a crash
programme to bring 10,000 megawatts (MW) on stream in the next
two years was implemented and another 10,000 MW thereafter.

Frequent blackouts disrupt manufacturing and have been a major
source of complaint among some of the Japanese firms with
production facilities in Indonesia.

Other major concerns with investors — the country’s onerous
labour laws and the “spectre of exorbitant costs” in cases where
companies have to retrench — are also going to be addressed,
Pangestu said, while still protecting workers’ rights. (Editing
by Ed Davies)

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