Nike eyeing expansion in Indonesia as satisfied with contractors - Industry minister | Company data
Indonesia’s industry minister says Nike Inc. (NKE) is considering raising its investment in Indonesia as the sporting goods maker, one of world’s biggest, seeks to make the country a production base as it considers partnerships with local contractors successful, while the apparent plan to increase investment could assist with wage issues that the company has faced in the past.
“The president of Nike says that they have joined with 38 local companies and are very satisfied. The 38 local companies employ 175,000 people and training is good. 98% [of the products] are for export and [the company] wants to make Indonesia a production base,” M.S. Hidayat told The Insider Stories and media Friday.
“They are planning to set up a factory and are doing calculations. I suggested that because they are already present in Sukabumi [city in West Java province south of Jakarta], that can be enlarged and [there are] other areas in West Java and Central Java. They have a willingness to develop in Indonesia and going forward, because they want to make big investments they have asked us to create a long-term wage policy,” he said without giving more details.
Nike has been present in Indonesia since 1988 after it moved its production base from Taiwan and South Korea as economic development boosted wages. Indonesia is the third-biggest supplier of Nike goods.
The company has encountered sporadic labor problems, with labor groups alleging its contractors resist granting mandatory minimum wage increases, while proponents of the company note that it offers steady employment and wages along with relatively good benefits to people in some of the poorest parts of Indonesia, and that companies can be exempted from mandatory increases under certain conditions. Nike implemented a code of conduct at its factories in the 1990s and conducts monitoring of labor conditions. Surveys have found that a majority of Nike employees respond that the company offers good working conditions.
Most recently, Nike is reported as saying it is investigating claims that military officials accompanied company negotiators seeking to negotiate with workers at Sukabumi to sign consent forms allowing payment of wages below the minimum level of 2.2 million ($227) rupiah a month. Companies are allowed to pay workers below the minimum wage if they obtain worker consent or can show that wage increases would financially hamper them.
