Local industries cut staff, spending as global slowdown
 begins to hurt

  Companies in many sectors have begun to lay off workers to stay afloat, a stark reminder that
  being one of the bright spots in the world for GDP growth this year does not make Indonesia
  immune to global economic turmoil.  

  Export-oriented industries are predictably among the hardest hit, with many reporting sales
  plunging 30 to 50 percent or even more, depending on their reliance on the overseas market. 

  Footwear and textile industries that depend heavily on the United States and European markets
  top the list, followed by rubber and food-and-beverage producers. The latter has also expressed
  concern over plans to impose a sugary drink tax next year, which could further reduce their sales. 

  Because of the bleak outlook, the domestic electronics industry is bracing for what it anticipates
  to be a 10 percent drop in sales next year.  

  Tens of thousands of workers have reportedly been dismissed across the country, and further
  cuts are expected. 

  The Manpower Ministry said at least 10,700 workers had been laid off nationwide during the first
  seven months of this year, but the Indonesian Employers Association (Apindo) reckons the
  figure is far higher. 

  “There have been at least 25,700 layoffs in the footwear industry alone. The number is way
  higher in the textile industry, not to mention other industries,” Anton J. Supit, who heads the
  Manpower and Social Security division at Apindo, told The Jakarta Post on Wednesday. 

  “During COVID-19, demand was still available, but restrictions made it difficult to meet it. Now it
  is much tougher because there is no order [from foreign buyers],” Anton added. 

  Apindo’s West Java branch, for example, recorded at least 73,000 layoffs across 126 firms as of
  Oct. 21; with the textile industry accounting for more than 80 percent of that figure. 

  So far, layoffs have been concentrated in West Java, a province home to producers working for
  prominent brands like Nike and Victoria’s Secret, while the situation in other regions is much
  calmer. 

  Apindo’s Central Java branch head Frans Kongi said on Wednesday that layoffs were occurring
  on a small scale only, but added that hundreds of workers had been sent on unpaid leave, while
  Adik Dwi Putranto, head of the Indonesian Chamber of Commerce and Industry (Kadin) in East
  Java, said there had not yet been any reports on either layoffs or furloughs. 

  Global economy projections for next year have mostly been revised down over the past few
  months amid persistently high inflation that has triggered a cost-of-living crisis in many
  countries and cooled demand for imported goods. 

  Josua Pardede, chief economist at private-sector lender Bank Permata, said on Thursday the
  global economic turmoil had now hit home, even though the impact was uneven. 

  Export-oriented industries and manufacturers of durable goods were experiencing a heavier
  impact, he said while others would prove more resilient, but none could escape the pressure
  of higher input costs if they relied on imported raw materials, given the depreciation of
  the rupiah. 

  Domestically, industries operating in regions with high minimum wages may face greater risk
  than others, he said, which goes some way to explain the layoffs seen in West Java compared
  with other regions in the country. 

  This may result in some relocation of industries to regions of the country with lower minimum
  wages, he said. 

  In response, businesses and associations have urged the government to take action to protect
  the domestic market, such as by keeping out illegal imports and preventing dumping. 

  They also called for a more dovish monetary policy after recent interest rate hikes decided by
  Bank Indonesia. 

  “The world is not okay. That’s not from me, the President himself says so. Many buyers have
  told us their forecast for 2023 has deviated from what they had initially told us. They too are
  puzzled,” Anne Patricia Sutanto, head of the Permanent Committee for International
  Treaties at Kadin, told lawmakers on Tuesday. 

  Furthermore, businesses are pushing both the government and lawmakers to allow them to put
  workers on reduced hours without increasing hourly wages, which they say would greatly help
  prevent layoffs, as businesses are planning to cut working hours to 30 hours from 40. 

  Manpower Minister Ida Fauziyah said on Tuesday that she had urged firms to look for
  alternatives and make layoffs a measure of last resort, which she said could be done by
  reducing work hours, shifts and overtime as well as choosing to place workers on
  unpaid leave. 

  However, Confederation of Indonesian Trade Unions (KSPI) president Said Iqbal contested
  claims that there had been mass layoffs, saying he had yet to receive any reports from
  members. 

  He said on Wednesday that employers may be intentionally using the threat of layoffs as a
  smokescreen to put off debates on demands from workers for higher wages, which many
  needed to stay afloat amid increasing living costs. 

  Source: The Jakarta Post 

  G20 host Indonesia says Putin may seek to join summit virtually

  Russian President Vladimir Putin will join next week's G20 leaders summit "if the situation is
  possible", his Indonesian counterpart and the meeting's host said on Tuesday, adding that
  Putin could attend virtually instead. 

  Joko Widodo, who is this year's chair of the bloc of major economies, said Putin during a phone
  conversation last week had not ruled out attending the summit in Bali, and would join if possible. 

  "But if not ... maybe he'll ask to do it virtually," Jokowi, as the Indonesian president is popularly
  known, told reporters during a visit to Bali. He did not elaborate. 

  The Financial Times newspaper earlier quoted Jokowi as saying that his conversation with Putin
  had left him with a "strong impression" he would not attend. 

  The Bali meeting is expected to be dominated by tensions over Russia's invasion of Ukraine,
  which Moscow calls a "special operation". 

  The Indonesian foreign ministry and presidential palace did not immediately respond to requests
  from Reuters for comment. 

  As G20 host, Indonesia has resisted pressure from Western countries and Ukraine to disinvite
  Putin from the leaders summit and expel Russia from the group, saying it does not have the
  authority to do so without consensus among members. 

  Jokowi in an interview with the Financial Times said Russia was welcome at the summit, which
  he feared would be overshadowed by a "very worrying" rise in international tensions. 

  "The G20 is not meant to be a political forum. It's meant to be about economics and
  development," he was quoted as saying. 

  Indonesia has also invited Ukrainian President Volodymyr Zelenskiy, who has said he would
  not take part if Putin does. 

  Several other world leaders, including U.S. President Joe Biden and Chinese President Xi
  Jinping, are expected to attend. 

  Source: Reuters 

  Indonesia Plans to Tighten Oversight of Crypto Market,
 Task OJK with Regulation 

  Indonesia plans to move the regulation, supervision and oversight of cryptocurrency investments
  to the Financial Service Authority (OJK) to better protect investors, its finance minister said on
  Thursday. 

  Currently, the Trade Ministry and the Commodity Futures Trading Regulatory Agency jointly
  oversee cryptocurrency in Southeast Asia's largest economy, where there has been a boom in
  such investments. 

  The new plan, laid out by Finance Minister Sri Mulyani Indrawati, is part of financial sector
  legislation that is being debated in parliament. 

  The use of cryptocurrency assets as a means of payment is illegal in Indonesia, but transactions
  for investment are allowed in the commodities market. 

  Sri Mulyani said as of June, there were 15.1 million cryptocurrency investors in the country, an
  exponential rise from just 4 million in 2020. That compared with 9.1 million investors in the
  stock market as of June. 

  "We need to build a mechanism of supervision and investor protection that is quite strong and
  reliable especially for investment instruments that are high risk," she told a parliamentary
  hearing, noting that the cryptocurrency market has faced turbulence recently. 

  The new bill would empower OJK to regulate and supervise "digital asset activities, including
  crypto assets and financial sector technology innovation," Sri Mulyani added. 

  Parliament officially submitted the bill to the government in September. Thursday's meeting was
  to present the government's first response and any additions to the proposed bill. 

  The bill will be passed into law after both the legislative and executive branches agreed on all
  provisions. 

  Parliament's proposals also contain provisions to widen the central bank's mandate to include
  economic growth in addition to price stability. 

  Sri Mulyani said she supported the proposal, but also underlined the importance of the
  independence of financial regulators, especially that of BI. 

  "It is important for us to continue to provide signals that independence and credibility of
  institutions ... are strengthened and maintained because this is the most important asset to
  maintain financial system stability," she said. 

  Source: Kontan