This is not about travel posting, but merely my personal thought on one of economic issues in Indonesia, yes labor. My last business trip was visiting various garment factories in Vietnam, a newly emerging economic giant in South East Asia. There, I had a long discussion with many Korean investors who viewed the business climate in Vietnam compare to Indonesia.
One of the Korean investor who have huge business with our company open our conversation with the problem of anti dumping issue in Vietnam. He said Bush administration imminently will impose an anti dumping similar with “safeguard” in China.
He had the right to be worried, once is imposed, Vietnam will have the limitations to export their garment production to US market. With billions of dollar pumped to build a huge modern garment factories in the greater area of Ho CHi Minh in the last five years, investors will face a great challenges to recalculate their return on investment.
Labor is the additional burden in Vietnam, he added and it made me raised my eyebrows. Why? Is a communist country and they have Union that directly controlled Labor Central Committee of Communist Party. Is much easier than Indonesia when a factory manager must deal with multiple unions which linked with various NGOs or organized independently.
According to him, who also own garment factories in Indonesia, labor unions in Indonesia is more mature. In a sense, unions can negotiate without provoking the management and management can gain their trust if they are open to them. Yes there are many bad unions, he continued, but unions can make compromises without sacrificing their rights.
In Vietnam, unions is hard to make a win-win solutions because they always dictated their terms and the government is always favor them. Strikes is always their tool to pressure the management and will not stop unless management agreed with their demands. It’s a real challenges and make us must carefully to deal with them, he complaint
Closing our conversation, he will be moving again to Indonesia and added more capacity to anticipate the unpopular anti dumping act by US administration. He has proved his promised and I witness the influx of many Korean garment investors to Indonesia in the past few months.
Business is business and there’s no such as free lunch in the word as they investment also challenges the local business here. Today, I spoke with one of the leading garment manufacturer in Bandung. They have a state of the art facility, modern machinery, full dedicated skilled workers and indeed, a commitment meet international buyers requirements in quality and human rights.
Business is not so good recently, she said. Price is getting worst and productivity is lower than expected. Prediction in 2008 is gloomy and they still struggling to cut their budget here an there, but the garment price is a big challenge. We don’t know our future, so many uncertainty.Is a contradictory situation, but big capital can always cross subsidized their offshore business with their profitable counterparts, especially in the garment industry.
While local business with a single facility won’t be able to do the same thing. Local financial market still viewing garment is a sunset industry and they stop flowing the money with low interest after the economic crisis in 1997.
I just kept wondering what has happened with “best kept garment producer in the world” as many people said for Indonesia garment industry after free quota?. I have no answer for this at this moment, but my Korean friends always able to see the opportunity apart from political turmoil, sectarian problems, worst traffic in jakarta,and endless natural disaster. Glad we still sexy in front of them.