Govt prepares incentives
for labor-intensive
for labor-intensive
Thu,
February 12 2015, 7:41 AM
The
government is preparing specific incentives to spur growth in the
labor-intensive industry to help create 2 million new jobs each year.
The incentives may comprise fiscal incentives, such as exemption of import duties for raw materials, and non-fiscal incentives, according to Investment Coordinating Board (BKPM) chairman Franky Sibarani.
“The most important point is that we’ve lost the momentum to boost exports and investment in the labor-intensive industry. The trend shows that in the past three years, the number of workers absorbed by the industry has declined,” Franky said Tuesday on the sidelines of an investment forum at his office.
Apart from providing the much-needed incentives, the government also wants to improve the labor climate and industrial relations by revising rules on fixed-term contracts and sub-contracts of seasonal output as well as assuring certainty in minimum wage arrangements, according to National Mid-Term Development Plan for 2015-2019.
The labor intensive industry is defined as that which employs at least 200 workers with labor costs making up at least 15 percent of total production costs. The industry comprises the manufacturers of food and beverages, tobacco, textiles and garments, leather and leather products, footwear, toys and furniture.
Main issues center on minimum regional wages, business licensing at the regional level, business energy and utility, logistics and supply of raw materials. Despite the obstacles, the number of investment projects in the labor-intensive industry followed an upward trend from 2010 to 2014, surging by between 20 and 40 percent each year with 1,528 projects registered in 2014, contributing 15 percent to overall domestic and foreign investment. However, the same trend did not apply in terms of labor absorption. The number of workers have tumbled, down from 337,305 workers in 2011 to 203,732 workers last year.
A number of business groups representing the labor-intensive industry have requested the government guarantee certainty in minimum wage policy to enable them to design long-term business plans.
Indonesian Footwear Association (Aprisindo) chairman Eddy Widjanarko said at the forum that certainty in labor wage arrangements would allow footwear manufacturers to boost investment and exports significantly. Footwear exports reached US$4.5 billion last year and 68 firms poured investment into the sector.
“If the regional minimum wage problem can be resolved, I’m sure 200 new firms would inject investment. If a firm has 10,000 workers on average, the sector will take up 1 million workers,” said Eddy.
The BKPM has been supporting the government in tackling this issue, which is by way of a certain formula that takes inflation as a component to determine annual wage increases.
Indonesia has applied a cheap-labor policy to lure foreign investment to accelerate development and lower high rate of unemployment since the New Order regime under the late former president Soeharto.
In addition to the wage issue, the business groups also demanded the government provide special incentives to increase expansion in the labor-intensive sector to enable them to compete with fellow producers in other Southeast Asian countries
The incentives may comprise fiscal incentives, such as exemption of import duties for raw materials, and non-fiscal incentives, according to Investment Coordinating Board (BKPM) chairman Franky Sibarani.
“The most important point is that we’ve lost the momentum to boost exports and investment in the labor-intensive industry. The trend shows that in the past three years, the number of workers absorbed by the industry has declined,” Franky said Tuesday on the sidelines of an investment forum at his office.
Apart from providing the much-needed incentives, the government also wants to improve the labor climate and industrial relations by revising rules on fixed-term contracts and sub-contracts of seasonal output as well as assuring certainty in minimum wage arrangements, according to National Mid-Term Development Plan for 2015-2019.
The labor intensive industry is defined as that which employs at least 200 workers with labor costs making up at least 15 percent of total production costs. The industry comprises the manufacturers of food and beverages, tobacco, textiles and garments, leather and leather products, footwear, toys and furniture.
Main issues center on minimum regional wages, business licensing at the regional level, business energy and utility, logistics and supply of raw materials. Despite the obstacles, the number of investment projects in the labor-intensive industry followed an upward trend from 2010 to 2014, surging by between 20 and 40 percent each year with 1,528 projects registered in 2014, contributing 15 percent to overall domestic and foreign investment. However, the same trend did not apply in terms of labor absorption. The number of workers have tumbled, down from 337,305 workers in 2011 to 203,732 workers last year.
A number of business groups representing the labor-intensive industry have requested the government guarantee certainty in minimum wage policy to enable them to design long-term business plans.
Indonesian Footwear Association (Aprisindo) chairman Eddy Widjanarko said at the forum that certainty in labor wage arrangements would allow footwear manufacturers to boost investment and exports significantly. Footwear exports reached US$4.5 billion last year and 68 firms poured investment into the sector.
“If the regional minimum wage problem can be resolved, I’m sure 200 new firms would inject investment. If a firm has 10,000 workers on average, the sector will take up 1 million workers,” said Eddy.
The BKPM has been supporting the government in tackling this issue, which is by way of a certain formula that takes inflation as a component to determine annual wage increases.
Indonesia has applied a cheap-labor policy to lure foreign investment to accelerate development and lower high rate of unemployment since the New Order regime under the late former president Soeharto.
In addition to the wage issue, the business groups also demanded the government provide special incentives to increase expansion in the labor-intensive sector to enable them to compete with fellow producers in other Southeast Asian countries
My Opini:
labor-intensive industries to be something very important
in an economy. This is because the labor intensive industries can maximize the
potential of the workforce and thus can increase the effectiveness in terms of
cost.
There are several reasons why the labor intensive industries are very important:
1. Reducing unemployment
With the labor-intensive industry, it is directly unemployment will decrease, and the opportunities for absorption of labor in an industry becomes bigger. This makes everyone has the opportunity to work and work and meet the needs for themselves or for family
2. Improving the standard of living
The number of workers who are absorbed in a labor-intensive effort, it will cause everyone has income and will certainly improve their lives as well. And this will indirectly increase their national income or national income area Indonesia. It also resulted in the improvement of the livin
There are several reasons why the labor intensive industries are very important:
1. Reducing unemployment
With the labor-intensive industry, it is directly unemployment will decrease, and the opportunities for absorption of labor in an industry becomes bigger. This makes everyone has the opportunity to work and work and meet the needs for themselves or for family
2. Improving the standard of living
The number of workers who are absorbed in a labor-intensive effort, it will cause everyone has income and will certainly improve their lives as well. And this will indirectly increase their national income or national income area Indonesia. It also resulted in the improvement of the livin
g standards of Indonesian society.
3. Improving the ability of each individual
People who work in labor-intensive industries will automatically use their expertise, because of the labor intensive industries greatly reduced the use of machines and more use of human labor. This will lead to the increasing number of individuals who possess skills in a particular field.
4. Increasing domestic exports
The result of this labor intensive industry can be sold not only in domestic but also overseas. Foreign exchange is increasing and must also be followed by an increase in human resources within a country. Labor intensive industries also provide experience that by using human it will create amazing creativity of the community
3. Improving the ability of each individual
People who work in labor-intensive industries will automatically use their expertise, because of the labor intensive industries greatly reduced the use of machines and more use of human labor. This will lead to the increasing number of individuals who possess skills in a particular field.
4. Increasing domestic exports
The result of this labor intensive industry can be sold not only in domestic but also overseas. Foreign exchange is increasing and must also be followed by an increase in human resources within a country. Labor intensive industries also provide experience that by using human it will create amazing creativity of the community
news source:
http://www.thejakartapost.com/news/2015/02/12/govt-prepares-incentives-labor-intensive-industry.html
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