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Indonesia bets on labour-intensive firms to boost economy
07
Oct '15
As Indonesia fights a stubborn economic slowdown, President Joko Widodo has launched an investment programme to monitor 16 companies in the labour-intensive industry in an effort to increase employment and inject some optimism in the country.

During his speech at PT Adis Dimession Footwear which manufactures shoes for Nike, in Tangerang, the President stressed the significance of optimism despite the gloomy economic scenario and encouraged the 16 companies to remain upbeat, insisting that the economy can still be turned around.

Most of these 16 companies are involved in making apparel, garment and footwear and will work with the Investment Coordinating Board (BKPM) to ensure the employment of over 1.21 lakh workers over the next five years.

These companies have so far invested Rp 11.4 trillion ($789 million) as of September, of the total Rp 18.9 trillion investment estimated for the projects. Eleven of these are from South Korea, Taiwan, Japan and Singapore. Together, they are expected to bring around $1.3 million in export earnings.

BKPM chairman Franky Sibarani stressed that labour-intensive industry plays a big role in creating multiplier effects for the country's economy and ushers in development in areas surrounding their factories.

In Indonesia, food and beverages, tobacco, textiles and garments, leather and leather products, footwear, toys and furniture come under labour-intensive industry. Investments in this sector had moved upwards between 20 to 40 per cent during 2010 to 2014 and accounted for 15 per cent of total domestic and foreign direct investment.

Unfortunately, despite the industrial growth there was no substantial labour absorption. Mass lay-offs totalling more than one lakh workers last year set alarm bells ringing among policy makers. (SH)

Fibre2Fashion News Desk – India

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