Jeff Perkins, president director of Nike Indonesia, met with Industry Minister M.S. Hidayat on Friday to discuss the possibilities of making Indonesia the biggest manufacturing base for the company.
“Basically, Jeff Perkins was pretty happy with [Nike’s] investment here,” said Hidayat, former chairman of the Indonesian Chambers of Commerce and Industry (Kadin), adding Nike is committed to invest more in Southeast Asia’s largest economy.
According to Hidayat, Nike Indonesia has cooperated with 38 contract factories that employ around 175,000 workers, making Indonesia among the largest manufacturing base for Nike products, apart from China and Vietnam.
Nike Indonesia is part of the US sports apparel maker Nike.
However, Perkins also raised several issues on the investment climate, especially, in regards to the country’s labor condition.
Perkins, Hidayat said, referred to the series of labor demonstrations in Jakarta and some industrial townships near the capital.
At the end of last year, workers held rallies to voice out anger towards outsourcing scheme that limited benefits and called for a wage increase.
Different administrations in Indonesia, especially in Jakarta, Banten and West Java, that harbor a large numbers of manufacturing companies, subsequently raised the minimum regional wage as a response.
In Jakarta, minimum wage was raised by 44 percent to Rp 2.2 million ($227) per month.
Eddy Widjanarko, chairman at The Indonesian Footwear Association, said that several foreign investors suspended their plans to invest in footwear industry, following the minimum wage increase.
According to Eddy, the delayed investment valued more than $1 billion.
“There are at least 10 foreign investors from Taiwan and South Korea that have decided to delay their investment. They chose to take a wait-and-see stance,” Eddy said.