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Jakarta, CNBC Indonesia – PT Shyang Yao Fung, one of the companies that makes well-known brands whose buyers include massive Adidas layoffs to thousands of employees. The factory located in the Tangerang city of Banten decided to move the factory to Brebes, Central Java, due to the issue of high wages.
The UMK value at Brebes Regency this year stands at Rp 1,807,614, up from Rp 1,665,850 last year. This figure is relatively low compared to other regions of Central Java, which is in the range of Rp 2,000,000. Compare MPE in Tangerang city reaching Rp 4,199,029, not to mention the highest sectoral MPE.
The director of the Indonesian Footwear Association (ASPRISINDO), Firman Bakri, explained that the incident was a step that the company must take for commercial reasons. According to Firman, the policy has been prepared since 2019 because PT Shyang Yao Fung wants to relocate the factory to increase its production capacity. Banten is also considered uncompetitive for labor-intensive industries such as footwear.
“When we have to compete globally, it turns out that when in Banten province, in Tangerang, we are not competitive due to factors labor cost “So high that, in recent years, there has been relocation, relocation from various industrial centers where MSMEs have been very high, and then added sectoral minimum wage burdens,” Firman said in a dialogue via Zoom with Squawk Box, CNBC Indonesia, Monday (04/05/2020).
Firman explained that in recent years several industries in Banten had carried out relocations because they were considered to make the company’s competitiveness less competitive compared to other regions. They even mentioned that labor law is also one of the reasons why Banten is no longer competitive compared to other regions like Central Java.
“We are honest that our labor laws make the conditions in Banten not competitive, just like the conditions of the people there, at the time of autonomy, since there is now competition between regions, this should be an important note when companies choose to move to other regions, then consider other more competitive areas, “said Firman.
PT Shyang Yao Fung will move to Brebes, Central Java. However, this is appreciated because relocation is still happening in other regions of Indonesia, not Vietnam or Cambodia, which also has lower wages and become competitors in the shoe export market.
“So the rational option is to relocate and we are still grateful that the relocation is still ongoing in Indonesia, not those who relocate and then flee to Vietnam or Cambodia, who are our competitors,” Firman explained.
[Gambas:Video CNBC](hoi / hoi)
