Page 48 - The World About Us

Industrial Surabaya
1.1.1
2.2.3

What is the role of overseas investment in Indonesia?

From the mes of Suharto's ‘New makes manufacturing for export very
Order’ administra on, overseas a rac ve to large transna onal
companies have invested heavily in corpora ons.
Indonesia, especially in the oil and gas Over 170,000 workers in Indonesia
and minerals sector.
are employed making garments and
In recent years the Indonesian shoes for sportswear giant Nike. Tens
government have encouraged more of thousands of workers are employed
foreign direct investment in wider fig.129 Oil depot, East Java. making clothing for Adidas.
areas of the economy. In 2017 foreign Indonesian palm oil is found in
investment in Indonesia amounted to Foreign investors are a racted to many products, such as Magnum ice
110 trillion rupiah or US$8,138 billion. Indonesia because of its rich natural creams, Colgate toothpaste, Dove
This was almost twice the 61 trillion resources and very low employment cosme cs, Knorr soups, KitKat, Pantene
rupiah of investment generated from costs. The minimum wage in Indonesia
is approximately half that of China. This shampoo and Pot Noodles.
within Indonesia itself.

Indonesia’s Investors Is foreign investment in Indonesia a good thing?
Palm Oil There is no doubt that investment
Wilmar Interna onal from overseas companies creates tens
(Indonesia), Cargil of thousands of jobs in Indonesia.
(USA), Musim Mas (Singapore)
Most of these may not be well paid
Textiles by European standards but for many
Nike (USA) Adidas Indonesians they represent a stable
(Germany: work is job, instead of the insecurity of work in fig.130 Oil palm fruit.
mostly contracted to the informal sector. Foreign investment hectares of oil palm planta on and 25
Indonesian
also brings in technological advances, palm oil refineries in Indonesia.
companies), Levi (USA), The Gap
training and new skills which benefits
(USA), Primark (Ireland) the whole economy and society at Wilmar and other agribusinesses
Oil and Gas large. have been accused of poor
Exxon Mobil (USA), environmental prac ces, such as
Chevron (USA), However, many people are cri cal se ng illegal forest fires and plan ng
Inpex (Japan), BP of the role of overseas companies, on environmentally-valuable peat bogs.
(UK), Shell (UK/Dutch) poin ng out that they invest in They have also been accused of
Banking Indonesia to exploit its low wages, less human rights abuses by organisa ons
Ci bank (USA), strict work regula ons and lower such as Greenpeace and Amnesty
Deutsche Bank environmental standards. Interna onal.
(Germany), HSBC (UK), Both Nike and Adidas have been Interna onal pressure forced
Standard Chartered
cri cised by organisa ons, such as Wilmar to adopt a “no deforesta on,
(USA)
Oxfam, for tolera ng poor working no peat and no exploita on policy” in
Cars and Motorbikes condi ons and exploita on in the 2015. It promised to stop buying from
Daihatsu, Suzuki, factories that supply their clothing. suppliers who cleared forest, drained
Mitsubishi, Toyota, peat land, or exploited local people.
Nissan (Japan), Both companies deny any
General Motors (USA) wrongdoing but Oxfam point out that fig.131 Palm oil refinery, Sumatra.
Cement trade unionists, who campaign for
Holcim (Switzerland), workers rights, are o en singled out for
Auhui Conch (China), poor treatment in the suppliers’
Siam Cement factories
(Thailand) Singapore-based palm oil giant,
Beauty & Personal Care Wilmar Interna onal, was described by
L’Oreal (France), Newsweek Magazine in 2012 as “the
Proctor and Gamble world's least environmentally friendly
(USA), Unilever (UK- company.” Wilmar has thousands of
Dutch)

48

Many factors contribute to a country’s economic development.