Economist: New Labor Wages Law could Deter Foreign Investment

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Petir Garda Bhwana

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  • TEMPO.CO, Jakarta - The Center of Reform on Economics (CORE) economist Piter Abdullah Redjadalam argues the revised Government Regulation (PP) No.78/2015 on wages could present legal uncertainty in the field of business, which would eventually hamper the arrival of foreign investors.

    Especially in critical times which Indonesia is currently facing, where the country is competing in attracting foreign investment relocation from Japan, China, and South Korea.

    “The government is expected to be assertive in solving the issues on labor if they hope to see high growth investment wise,” said Piter when reached by Tempo on Sunday, April 28.

    Read also: Jokowi Holds Meeting with Workers Unions President Nationwide

    As previously reported, President Joko “Jokowi” Widodo held a meeting with labor activists on Friday, April 26, where they suggested several ideas to be included in the revised PP 78/2015 on wages.

    Among others is returning the right to negotiate a minimum wages clause and rights on setting the minimum wage, which had been unilaterally set by the government based on the economic growth plus inflation formula.

    According to Piter, the right to negotiate between businesses and labors will reemerge the tripartite mechanism, which is feared to present the issue of uncertainty in the eyes of the business investors and eventually making them reluctant from investing in Indonesia.

    DIAS PRASONGKO