THE GOVERNMENT is trying to attract investment into labor-intensive sectors to increase domestic labor absorption. This is because in recent times, many incoming investments have targeted capital-intensive or technology-intensive sectors.
Coordinating Minister for Economic Affairs Airlangga Hartarto revealed that in recent times, investment has flooded the iron and steel industry sector as well as minerals and coal. These sectors do not require a lot of labor because their operations use a lot of technology.
“The last investment we saw was all in the steel industry. Steel is an industry that capital intensiveyes, so it must be accompanied by investment. labor intensive” he said to reporters when met at his office, Jakarta, Monday (29/7).
Airlangga said the government is preparing the semiconductor industry to attract investment into the country. According to him, the sector can absorb more workers than the sector that has recently attracted investors.
“One of the labor intensive is related to semiconductors but in the final phase, testing and fabrication. Well, this is what we continue to push,” he explained.
While preparing to receive investment in the sector, Airlangga continued, the government is also encouraging the preparation of human resources (HR) to be able to meet the workforce needs of the related industry.
Read also: Airlangga: Government Still Relies on Foreign Capital for Indonesian Economy
One of the efforts is through vocational education. The government is said to have prepared polytechnics to support the readiness of human resources through the Morowali Metal Industry Polytechnic and the Banten Petrochemical Industry Polytechnic. “So that’s what is needed and done, building polytechnics,” said Airlangga.
Airlangga’s explanation was related to the release of investment realization delivered by the Ministry of Investment/Investment Coordinating Board (BKPM). It was recorded that in the first semester of 2024, investment entering Indonesia had reached IDR829.2 trillion, 50.3% of the target set by President Joko Widodo of IDR1,650 trillion in 2024.
Investment realization in the first half of 2024 was recorded to have grown 22.3% from investment realization in the same period last year. Although investment is quite rapid, labor absorption is relatively stagnant, which is recorded at 1.22 million people.
The ability to absorb labor can be said to have shrunk. Referring to data from the Indonesian Employers Association (Apindo) in the last 9 years there has been a shrinkage of the workforce by a quarter from the initial position in 2013.
As of 2013, for example, every Rp1 trillion of investment that came in was able to absorb up to 4,594 workers. While in 2022, every Rp1 trillion of investment that came in was only able to absorb 1,081 workers. (Mir/Z-7)
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