Unmet promises, foreign workers: Chinese firms in Indonesia face bumps in the Belt and Road

Sun Online Desk

28th June, 2021 09:24:17 PM printer

Unmet promises, foreign workers: Chinese firms in Indonesia face bumps in the Belt and Road

When Japen Sihaloho and his family sold 3,200 square metres of land to zinc mining company Dairi Prima Minerals, they were promised jobs for people from their village in Dairi regency, in the Indonesian province of North Sumatra.

But six years later, the 58-year-old claims no one from Longkotan village has been hired by the firm, a joint venture between the Beijing-based conglomerate China Nonferrous Metal Industry’s Foreign Engineering and Construction and Bumi Resources Minerals, a subsidiary of Indonesian coal-mining giant Bumi Resources.

“My son has graduated and has repeatedly applied for a job with the company, but was not accepted,” he said, explaining that while no one from the village had been hired as a permanent worker, there were dozens of daily casual jobs such as lifting stones and digging that paid an average of US$7 per day.

Sihaloho and the 108 residents of the village have repeatedly demanded that Dairi Prima Minerals keep its promise to prioritise locals, even forming a union to emphasise their position, but they have been told the firm does not yet have the funds.

“I feel like I have been tricked by the company,” he said.
In South Tapanuli regency – where a US$1.5 billion Chinese-backed hydropower plant is being constructed by North Sumatra Hydro Energy, with Chinese state-owned company Sinohydro as project leader – Derlan Hutabarat, 68, has similar complaints.

“I have sold 10 hectares of my land to the company, but until now my son has not worked for them,” said the resident of Aek Batang Paya Village, who added he had been told young people in their village would be employed by the firm after the sale.

The villagers’ complaints reflect the reputational issues that Chinese firms doing business in Indonesia currently face, even as they look to ramp up investment in the Southeast Asian nation as part of the Belt and Road Initiative. While one aspect is managing locals and making sure their needs are met, the other involves dealing with perceptions that they and their local partners are prioritising Chinese workers. In response to queries, Dairi Prima Mineral corporate social responsibility manager Budi Situmorang said just 1 per cent of the company’s workforce was from China, while North Sumatra Hydro Energy’s public relations officer Myrna Soeryo said 22.7 per cent of the plant’s 651 workers were foreign.

Neither were willing to comment on employment agreements made while buying community land, but a copy of the land purchase negotiation document for Longkotan village seen by This Week in Asia stated that the company would prioritise hiring local people.

As of May last year, there were 98,900 foreigners working in Indonesia, making up less than 0.1 per cent of the total workforce of 124 million.

Chinese workers were the largest group, with under 36,000 workers. But their presence in infrastructure projects has also given rise to unhappiness over Chinese investment, which has worsened along with job losses amid the Covid-19 pandemic.

Indonesians say the workers are not technical experts and have questioned why they are not being selected to fill those jobs instead.

Last month, as hundreds of workers from China entered Indonesia to work on infrastructure projects ranging from tollways to power generation and mining, Confederation of Indonesian Trade Unions president Said Iqbal said it was akin to local workers being “given a muddy dirt road while foreign workers got a red carpet and a warm reception on behalf of strategic industries”, as reported by local portal Kompas.com.

China is technically Indonesia’s top source of foreign investment, and last year, realised investment from China reached US$4.8 billion, according to figures from Indonesia’s Investment Coordinating Board.

Chinese-funded projects in Indonesia include the Jakarta-Bandung high-speed rail project on the island of Java and the steel mining project in Morowali, Central Sulawesi. Earlier this month, Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan met China’s Foreign Minister Wang Yi in Chongqing, with both sides agreeing to accelerate the joint construction of Belt and Road projects and deepen cooperation in sectors including fishery, trade and aviation.

Officials such as Minister of Manpower Ida Fauziyah have tried to quell the unhappiness over Chinese workers by saying they correspond to the funding received. “If you look at the investment that enters Indonesia, a lot of it comes from China, which is directly proportional to the foreign workers placed in Indonesia,” Fauziyah told parliament in May.

But Jessica Liao – assistant professor of political science at North Carolina State University in the United States, whose research focuses on Chinese foreign policy and East Asian politics – said it was common knowledge that Chinese migrants entered foreign countries as tourists and overstayed their tourist visas when they found jobs in the local economy.

“These economic migrants used to go to the US and other Western countries, but as Chinese investments expand to non-Western countries, [they] also follow suit,” she said. “Laos is a good example as border crossing is extremely easy. With the number of Chinese tourists in Indonesia rising rapidly in the past few years, it is likely this problem may occur [there] too.”

Shohibul Anshor Siregar, researcher and politics lecturer at the Muhammadiyah University of North Sumatra, said it was problematic when the Indonesian government provided opportunities for Chinese investors in Belt and Road projects but did not care about deals that infringed the rights of local people.

To avoid potential social conflicts, Shohibul said the government should make local communities shareholders – with cash remuneration as well as shares in the relevant company – in projects that involved foreign investors.

“That way the people will own the company and enjoy the benefits from it,” he said, adding that this would help eliminate conflicts in projects such as those in North Sumatra as“the people [would] have a strong sense of belonging”.


Source: South China Morning Post