Minimum Wage Setting Reforms On The Horizon In Indonesia

Date: March 19, 2015
Author: Heng Shao

When it comes to Indonesia, the message at present is consistent: new investment is on hold due to uncertainty over the country’s minimum wage policy. Last month, a group of foreign investors canceled plans to construct sixteen footwear factories for this very reason. Clearly the sentiment is not shared across industries, however, as foreign direct investment increased by 16.2% year over year in 2014. Consumer goods companies applaud the rising wages as increased spending power means enormous opportunities for future growth. Whether viewed as a regional production base or as one of the world’s largest consumer markets, reforms being made to the country’s wage setting mechanism will be one to watch.