Industrial areas face slowdown, reduce days worked to cut costs

Companies operating in the industrial areas in Bintan, Riau Islands, have seen dramatic slowdowns due to ripple effects from the global economic crisis.

Liaison manager of Bintan Inti Industrial Estate (BITE) Jamin Hidayat, said up to 27 foreign companies there have opted to reduce operational costs by opening for fewer working days, due to slower demand from the global market.

"During the last three weeks, some companies already reduced the number of their working days from seven days to three days a week," he said in Bintan, Riau Island.

Jamin predicted that the crisis will take full effect in the area by March next year and companies will then probably start resorting to layoffs.

"Currently there have been no layoffs carried out in any of the companies", Jamin said. However, he added that local government must take extra precautions to prevent the area's businesses from collapsing.

He said one of the issues to be addressed carefully is the local minimum wage, which had been the subject of intense debate among labor organizations, business people and local authorities.

Labor organizations in the area called for a minimum wage of Rp 1,5 million, an amount deemed sufficient to cover most worker's expenses.

However, most foreign investors saw this amount as too much of a burden amid the continuing economic crisis.

"The workers and labor organizations will be more willing to grasp the tight situation for businesspeople if it is explained by local authorities using persuasive ways," Jamin said.

According to deputy head of Bintan regency Mastur Taher, the area had been losing its business competitiveness for some time, and the crisis has only worsened the situation.

"We have done our best to keep foreign investors in the area," he said, before adding that local government is willing to take a greater role in the matter if necessary.
taken from: thejakartapost