This article is more than 1 year old

The electronics island where COPS shoot ARMY and workers are rioting

Reg man stumbles into eye of the storm in Indonesia

Nobody's talking

Finding out more about Batam, its role in the global supply chain and working conditions on the island proved hard. While preparing this story I sought comment from labour rights organisations, which didn't reply. Supply chain analysts are aware of Batam but they've not researched it. Unions local and global didn't reply and nor did Indonesian inbound investment agencies respond to emails.

So it's been hard to get a perspective on what I saw on the island.

Here's what I do know. The near-riot I just missed was sparked by the Mayor's decision to cap the minimum wage at about US$220 a month. Workers want about US$280. That wage would be less than the World Bank's estimate of Indonesia's gross national income per capita of US$3,580.

It's not hard to see why workers are angry.

Indonesia has just elected reformist President Joko Widodo who, for the first time in the nation's democratic history, leads the country without having ties to military or economic elites. He's supposed to be on the side of folks like those who work on Batam.

But US$280 a month is not a living wage in Singapore. Yet a loophole in Singapore's free trade agreement with the USA means the lion city can can count goods made in Batam as having been made on its own soil when exported to the land of the free. That means Singaporean firms can enjoy low costs, then big markups.

Whether Batam's workers are exploited is hard for me to say. One of the things that drew me to visit Batam is that I occasionally heard stories of low wages and a casualised workforce with little or no job security. But as I researched this story I also found reports of company-funded medical clinics and wages well above Indonesian averages.

What I could find out, through Taiwan-based Gartner analyst Jamie Wang, is that Batam is very much on manufacturers' minds for two reasons. The first is that wages are rising in China, so businesses are looking for alternatives. The second is growth across Asia means manufacturers want operations in more than one place. Indonesia's population is over 250 million, so it's a decent market all by itself for some products. Batam's proximity to other South-East Asian markets also helps to get it into manufacturers' shortlists for new facilities.

So Batam's prospects are good. It already plays a decent role in the global supply chain for plenty of stuff that ends up in your hands and workplaces.

There are plenty of reasons its importance could grow. Singapore seems to have no qualms about doing business there. Indonesia's keen to grow and modernise. Batam's got a track record of bringing investment and jobs.

I came away from the island, and the research for this story, believing that it won't be long before Batam's rather better known than it is today. Whether it earns fame or notoriety is very much up for grabs. ®

More about

TIP US OFF

Send us news


Other stories you might like