The province of Central Java in Indonesia has caught attention of Japanese garment makers as one of the preferred destinations for setting up their production bases, according to Nikkei Asian Review.
One such company is the Nagoya-based men’s suit manufacturer Fukuryo, which has set up a garment manufacturing unit in a suburb of Semarang town in Central Java province. The unit, set up under Fukuryo Indonesia, now employs about 200 people who stitch men’s suits and other apparel.
Mitsubishi Corp., another Japanese company, is planning to construct seven factories in Central Java, in collaboration with Fast Retailing, which operates casual clothing chain Uniqlo. The proposed manufacturing units would produce casual clothing items for the Indonesian market, according to the report.
The two main factors that are pulling foreign enterprises to build their manufacturing bases in the Central Java province, which is home to nearly 60 percent of Indonesia’s population, are relatively lower wages and lack of major labour tensions.
At present, the official minimum wage in Semarang is 1.42 million rupiah (about US$ 123) per month, which is approximately 40 percent lower compared to the 2.44 million rupiah minimum wage in the Indonesian capital Jakarta. Minimum wage in Bandung, the provincial capital of West Java province is also more than 2 million rupiah per month.
Secondly, so far, Semarang has witnessed relatively few large labour disputes, while West Java has seen a more number of radical demonstrations by employees demanding higher wages.
Although minimum wage has risen by 18 percent this year in Semarang, wages in the Jakarta metropolitan area and other major cities are likely to increase further.