Migrant Workers in a Corner of the Growth Triangle By: Ace Partadiredja Introduction opments in Batam have progressed at a Twenty kilometres southeast of Singapore, or about 25 minutes by ferry, significant pace.
there is an Indonesian island.
Batam.
This 415 sq km island, with reddish yellow podzolic soil, is agriculturally good for nothing but tropical shrubs, snakes and monkeys, and some would add, is finan cially a loss to the Indonesian government.
Until the mid-1970s, this island was rather tranquil, somewhat backward, and like the other islands in Riau, was practically un Approved foreign investment in Batam topped US$ 295 million in 1990 while approved domestic investment in creased by seven-fold, from Rp 53 million in 1989 to Rp 354 million in 1990.
Singa pore is still the main foreign investor in Batam.
Indonesian investors, notably the Salim Group, have alsomadetheirpreserice felt on the island.
The investments, foreign and local, have largely gone into real estate, inhabited except by a handful of farmers tourism and electronics.
All the same, and fishermen.
growth has accurred on all fronts.
This paper is intended to expound the issues and prospects in supplying workers, especially at lower skill levels, to the flourishing manufacturing sectoronthe In December 1989, the then Deputy Prime Minister of Singapore Goh Qiok Tong put forward the idea of a Growth Triangle involving Singapore, the nearby Malaysian state of Johor and the Indonesian island of Batam.
Malaysia and Indonesia haveendorsedthe G rowthTri angle concept ASS 600 million joint venture to develop an industrial paric on Batam island was announced in January 1990.
In July 1990, an Indonesian working group was formed -to coordinate the development of Riau Province.
On28 August 1990, aMemorandum ofUnderstanding was signed between Indonesia and Singapore to promote the development of RiauProvince.
The devel It is also envisaged that the lessons learned through the Batam experience can be applied to the other parts of Indonesia.
The next section of this paper offers a historical sketch ofisland's development as well as an outline of the comprehensive master plan for Batam.
The third section.
*) The authors would like to thank the officials of Batamindo Industrial Management Pte Ltd for their assistance in this project.
They wouldalsolike to express theirgratitude toSingapore EcononicDevelopmentBoard for arranging the site visit to the BatamIndustrial Park.
Prof Dr.
Ace Partadiredja adalah Dosen Fakultas Hconomi UGM YogyakatU dan Universitas Nasional Caroline Yeoh,S ingapura.
which forms the coneofthis research project, analyses the profile and other characteris tics ofthe workers, their reasons for taking up employment in Batam, and their The lessons that can be drawn from this project are discussed in the fourth section while the concluding remarks are taken up in section five.
A questionnaire survey was con ducted over a two-month period, from February to March 1991.
The respondents were, at that time, undergoing training in Singapore before taking employment with various companies in the Batam Industrial Park.
Five hundred questionnaires were sent through Batamindo Industrial Man agement Pte Ltd.
A total of 498 question naires were returned, duly completed.
This represents a response rate of 99.
Before we move on to discuss our research findings, an overview of the de velopments on Batam island is presented in the next section.
This is to facilitate a better appreciation of the manpower issues fea tured in this paper.
The Transformation of Batam Unlike the mainland (Riau Darata.
of Riau Province, the 3.
214 islands of the Riau archipelago {Riau Kepulaua.
are much underdeveloped, sparsely populated, but potentially rich in mineral resources, tourist spots, and strategically located.
Batam is one of them.
Batam's geographi cal position at the crossroad ofinternational shipping routes between the Indian ocean and Pacific ocean, makes it, like Singapore, a strategic site for the processing and dis tribution of commodities, and its close proximity to Singapore underscores its potential as a centre formanufacturing and tourist activities.
Batam's rapid development, how ever, did not begin until the mid-1970s.
ThefirstmasterplanforBatam wasprepared by Nissho-Iwai, a Japanese consultancy firm, and Bechtel of the United States.
The study was commissioned by the Indonesian state-owned oil company.
Pertamina, to develop the island into a base foroil and gas exploration, and related downstream processing activities.
The marine bases at Batu Ampar and Sekupang are the result of The masterplan was approved by the President, who concurrently issued Decree No.
41 of 1973, which provided for the establishment of Batam island as an industrial area.
By the late 1970s, it was clear to Indonesian planners that Batam can offer more than justlogistic bases forthe energy The original master plan was re viewed by an American consultant.
CRUX
This study considered the decline in oil and oil-related activities, and rec ommended guidelines for a more broadbased development of the Batam Island.
The development strategy embraced a wider vision offuture growth for the island, which is strategically located some 20 km south of Singapore.
Studies were conducted to help develop Batam into an industrial, commer cial and tourist centre as well as to expand its traditional role as a warehousing and transhipment centre.
A new Presidential Decree.
No.
of 1978, was issued to encourage the developmentofexport-oriented industries and to streamline the importation of materials required by manufacturing industries on the island.
Thecniire island was designated as a bonded zone.
In 1979, a review of previous planning studies led to Uie fomiulation of a comprehensive master plan for the island up to the year 2006.
The 1979 masterplan focused on the development oftranshipment facilities, the establishment of industrial estates, the de velopment of areas for the import and ex port of goods, the construction of tourist activities and the provision of infrastructural support such as offices, shopping centres, recreational facilities and residential units.
The masterplan takes into account Batam's relations with Singapore in almost every aspect.
In particular, it focused on Singapore's almost exhausted capacity for furtherecpansion which would, of course, be Batam's comparative advan tage for the future.
At the same time.
Batam is well-positioned to take advantage of Singapore's established business and fi nancial services network as well as the citystate'sefficientfacilitiesforcommunication, transportation and other services.
Batam's potential as an investment location is now duly recognised:
Baiu Ampar area, in the north, has been designated forlight and medium industries as well as transhipment activities.
Sekupang area, as a centre for agro-based industries, and for export processing and transhipment activities.
The Tanjung Uncangpeninsula.
outheastofSekupan.
, as a complex for wood processing industries.
the east coast as the main industrial complex for light and medium industries.
and, the Nongsa area, in the northeast, as a holiday resort and tourist centre.
Batam Centre will be the island's administrative and com mercial hub.
The Batu Ampar area, comprising the sub-regions of Batu Ampar and Muka Kuning, is being rapidly developed into a region for light and medium-scale indus Some 30 to 40 industries, mostly of medium size, will be accommodated in the planned industrial zone.
Some existing heavy industries, situated for the most part close to the present harbour facilities, are also located in this area.
"Batam is extremely attractive for industrial, trade and tourist enterprises due to its strategic location and its very close proximity to Singapore's excellent trading, banking, transport and business service Mukakuning, a landlocked area ad jacent to Batu Ampar, will also be used for light and medium industries, government and commercial offices and housing.
large scale industrial development project taking shape in the Mukakuning sub-region is the 500-hectare Batam Industrial Park.
Professor Dr Ing.
Habibie The Sekupang region, comprising Sekupang.
Tanjung Uncang and Sagulung, has already undergone significant develop Office buildings have been con structed, water supply lines have been in stalled, and electricity generation and transmission system have been laid down.
This zone will be the focal point for a core of lighl-to-medium sized industries.
The development plan for Sekupang includes (Indonesian State Minister for Research and Technolog.
The 1979 comprehensive master plan, which servers as the buleprint for Batam's development to the year 2006, divides the island into four major devel opment areas, with each region playing a different role in Batam's development.
The provisions forsmall-scaleshipy^ andship Tering Bay, is being developed into admin repair industries, agricultural activities and The port facilities at Sekupang istrative and commercial core ofthe island.
Batam Centre is set.
to be the downtown are being expanded to service the island's export-based industries as well as inter- offices, educational institutions, shopping area of the island, containing government island trading, cattle exporting, tranship centres, commercial complexes, hotels, and ment and other shipping activities.
leisure and recreation facilities.
Residential AS$ 1billionpropertydevelopment project, said to be the biggest on the island, is being developed here.
the 2000-hectare resort, to be developed over a 10-year pe riod, comes complete with a theme park, country club, golf and shooting ranges, duty-free shops, supennaiicets, restaurants and nightclub.
The East Coast region.
which com prises the sub-regions ofKabil-Batu Besar.
Duriangkang-Tanjung Piayu and Nongsa, is slated to be the "heart and core" of the The developmentplan has allocated some4000hectares in the Kabil-B atu Besar vicinity for medium-scale and heavy in dustries, with a smaller area aside for in tegrated wood industries.
A US$ 400 mil districts will be arranged around this urban core to accommodate those working here.
Some 147000 out ofthe 700 000 projected for the entire island are expected to reside in this region.
The priority given by the Indonesian government to Batam is evident from the setting up of three special agencies to oversee the island's development, an envi able position not given to any of the other 13 700 more islands throughout Indonesia.
Themost prominent agency is BIDA which has been given almost a free hand to steer Batam's industrial development BIDA's Chairman.
Prof Dr Ing.
Habibie, is widely regarded as a brilliant technocrat personally drafted into the Indonesian Cabinet by President Suharto, to oversee the island's development.
lion industrial park is under construction the 365-hectare Batam Kuang Hwa Industrial Zone is strategically located with Asia Port at its doorstep and is only a Development with "Unlimited" Supplies five-minute drive from the airport.
of Workers The sub-region ofNongsa is set to be the island's tourist centre.
Nongsa already bo^ts a number of world class hotels and recreational facilities while several more Today, eight business groups have been given green light to develop industrial estates on Batam island.
The proposed in dustrial estates vary in size from 20 to 500 hotels and motels, golfcourses and marinas These include the 20-hectare First are under consluction in 1991, will have sea-sport facilities and resort accommoda tion spread over 11 hectares of waterfront.
TriangleIndustrialPark atTanjungUncang.
the 30-hectare Thomas Technology Park at Batam Centre.
the Kabil and Tanjung A road network connects these tourist fa Uncang industrial estates, at Kabil and Tanjung Uncang, covering 200 hectares.
the 100-heciare Spinindo Industrial Area at Tanjung Uncang.
tlie 350-hectare Seafront cilities to airport, harbour and ferry temiinais, and other centres on the island.
Batam Centre, looking out across Industrial City at Sagulung.
the 365-hectare Kuang Hwa Industrial Zone at Kabil.
for work in the factories.
The workers re and the 170-hectare Kabil Indonusa Estate quired to support the various industrial projects on the island have to be sourced which isdesignated forboth light andheavy from otherparts of Indonesia, mainly from Java-Indonesia's most densely populated The centre-piece of Batam's indus trial development is the S$ 600 million Batam Industrial Park (BIP).
This industrial Indonesian workers recruited forthe tenants park is a joint-venture between two Sin gapore government-owned companies.
Singapore Technologies Industrial Corpo ration and Jurong Environmental Engi neering, and the Salim Group.
Indonesia's largest business conglomerate.
An initial 500 hectares is being developed over the next five years with another 1000 hectares reserved for future development.
The development and management of BIP have been configured to provide total support services for hassle-free busi ness start-ups.
Batamindo Investment Corporation (BIC), incorporated in Jakarta.
The focus of this study is on the at the BIP.
in this instance, the task of sourcing the workers is relegated to Tunas Karya, an Indonesian-Singapore Jointventure based in Jakarta.
The Supply of Labour The number of unemployed people in Indonesia is high, close to what Lewis called an "unlimited supply of labour".
The consist of the uneducated .
ementary school.
Junior and senior high school graduates, and even university From this pool of Job seekers.
Tunas Karya shortlisted only those with a is responsible for developingthe logistics, minimum of senior high school (SMA) or communications and other services to equivalent qualifications (SMEA.
STM).
support the park's operations.
Batamindo Thesalaries forproduction operators Industrial Management Pte Ltd (BIM), in start from S$ 90 permonth forthe first three months,S$ ICQ permonth forthe nextnine months and S$ 115 per month for the sec ond year.
In addition, the workers are pro corporated in Singapore,is responsible for the planning, designing and marketing of BIP.
BIM will also manage the industrial and licensing requirements of the park's vided with meal allowances of S$ 4 per day while training in Singapore.
The workers arealsoprovidedwithfree accommodation estate and handle all logistics, manpower BIP, when completed, will provide employment and housing for 50 000 to 80 and medical services.
These workers are 000 Indonesian workers.
The current trained in Singapore before they start work in Batam.
The training stints of 3 to 8 population ofBatam, estimated at 100000, months are distinct attractions to prospec is clearly insufficient to support the pace of industrial development on the island.
tive workers.
There appears to be consid erably more applicants than what the Moreover, the local residents in Batam are mostly farmers and fishermen, without the companies could absorb.
Thissuggests that the employmentpackageofferedbyTunas requisite skills and "industrial discipline" Karya are sufficiently attractive.
The Provile of the Workers The Other information channels, such Since Batam the surrounding islandsaresparselypopulated, andtheedu cational levels of the local population are rather low.
Tunas Karya has to recruit most of the workers from other parts of Indonesia.
Table 1 shows the various sources of information for prospective job applicants, viz,DepartementofManpower, as BCAandTunas Karya, werementioned by about4 to 5 % of the respondents.
The Javanese and Sundanese are well-known for their reluctance to leave their home villages.
This is especially so with the older generation.
This attitude is typically expressed in a world outlook among them .
"We should get.
Bank Central Asia (BCA).
Tunas Karya, newspapers, friends, and other The most popular source of infor- {Mangan ora manganwaton kumpu.
mation appears to be newspaper advertisements, as indicated by 46% of cording to theprovinces of the birth place.
the respondents.
Incontrasttothis "modem" way of information dissemination, there is whether we have something to eat or not" ble 2 shows the origin of the workers ac The fact that many of the workers at BIP came from Java begs the question: is there a change in outlook ? also the "traditional" channel ofcommuni cation through friends which, in Javanese, is called "getok tular" method, i.
"mouthto-mouth news".
This personal method is stillusedin therecruitment of illegalwork ers for plantations in Malaysia, and is still Table 2.
Home Provinces of Respondents Provinces Number of workers (%) ?7 7 Jakarta West Java regarded as being effective.
As much as 8% of the respondents identified friends and Central Java Yogyakarta Special Region East Java neighbours as their sources of information about Batam.
The local offices of the De Sumatraprovinces Other provinces Not specified partment-of Manpower (Departemen Tenaga Keij.
is another major source of information on employment opportunities in Batam.
this case, for 31.
5% of the About 39% of the respondents came from Java .
xcluding the Jakarta Capital SpecialRegio.
For manyof them,Batam is a far away place unknown to their par Tabel I.
Sources of Job Information Sources of Information .
Number of Respondents {%) Newspapers ents, or even to themselves.
Yet, unlike theirparents, they are willing to leave their home villages to seek employment else The respondents' reasons for ac power Dept.
Bank Central Asia cepting workinBatam are varied : to become Tunas Karya independent .
, to getnew experi Friends Other sources Local offices of Man No response Total to supplement the family income, to see Singapore, lo support the government program in developing Batam as an indus trial area.
This is an interesting phenomenon in the sense that, unlike transmigration, this process of labour migration is a shift of resources from the traditional agricultural sector to the modem industrial sector.
This structural transformation is, in the context of Indonesia's development aspirations, a change in the desired direction.
Those who were attracted by the offer were not always SMA graduates, but also SMEA {Sekolah Menengah Ekonomi Atas.
Economic Sen ior High Schoo.
STM {Sekolah Teknik Menengah.
Technical Vocational Schoo.
D1-D3 .
ne to three year diploma program at university leve.
, and other SMA equiva Table 3 shows the profile of workers in terms of education.
It is interesting to note that univer sity graduates were also attracted to factory jobs in Batam.
These jobs were clearly not designated for them.
It is possible that they could not get job i their hometowns.
How ever, on a more optimistic note, it is likely that, as the industries in Batam develop, more executive positions will be opened to these university graduates.
Table 4.
Working Experience of Respondents Have not worked before Have worked before Not specified (%) It appears that the employers prefer fresh and inexperienced workers.
One possible explanation is that it is easier to inculcate industrial discipline and work ethics to those without prior working ex In any case, the previous working experience may not be all that relevant to the kind of woric they are having now.
Do these woricers intend to stay on and work in Batam ? This question is im portant for the companies as they need "a continued supply ofworicersto sustain their manufacturing operations.
Forthe moment, it is not possible to gauge what are the plans of the respondents at the end of their twoyear contracts.
Table 5.
Plans After Termination of Contract Table 3.
Highest Educational Level of Plan
Respondents Number
Number of workers (%) Renew the contract with Number of workers (%) the same company Move to another company SMA
STM
in Batam
Go back home
Wait and see
SMEA
D1-D3
Others Universitygraduates Not specified OUiers Scfiools Another interesting characteristic of the respondents is that most of them .
%) do not have any working experience.
This may be gleaned from Table 4.
As shown in Table 5 above, most of the respondents .
9%) are adopting a "wait-and-see" attitude.
for these respond ents, important considerations would in- elude the salaries offered after their two to take on more responsible positions in the years ofworking experience, the prospects for promotion, family and/or marriage, employment opportunities elsewhere .
ncludingin their home village ortown.
In any case, it is too early forthe respondents to think seriously about renewing their employment contracts as they just started woricinBatam.
Interestingly, though, none of the respondents indicated a change of employment to anothercompany in Batam.
this reflects, to an extent, a sense of,loyalty to the companies they belong to.
factories in Batam.
The lure of going back home is al The workers who were, employed were the lucky, ones.
They have been se lected from thousands of applicants.
When asked whether there might be others who were willing to work in Batam, they gave a wide range of response.
Table 7 shows the numberofworkers saying "there aremany", "there are a few", "does not exist", and "don't know".
Table 7.
Number of Respondents Reporting on the Existence of Prospec tive Workers in Their Home Villages ways great, especially forthose who left the home village for the first time.
So, there is always the possibility that these workers would return home if there are employment opportunities there.
To what extent is this the case ?Table 6 offers an indication of the intention of the respondents, if indeed, there are employment opportunities at home.
Table 6.
Plan If There Are Employment Opportunities At Home Number of workers (%) Would go back Would not go back Wait and see Not specified About 16% of the respondents indi cated that they would like to retum to their home towns and villages if there are Job A more interesting observa tion is, even at this early stage, at least 11% of the respondents have decided not to return home even if they are offered em ThI.
s pioneering group of worken* could perhaps be identified and groomed "niose saying:
Number of workers {%) There are many 'There a few Does not exist Don't know Not specified Alniost half of the respondents indi cated that "there are many" who were seek ing employment in Batam.
This is a reflec tion of the fact that there was large pool of unemployed people in Indonesia, or sim ply, that the incentives given to workers in Batam are more attractive than in the other parts of Indonesia, orboth.
More than 85% of the respondents indicated that they were willing to help others to get jobs in Batam iftheywere approachedby theircompanies.
Some Lessons from The Project this is a simple, but infonnative.
We can draw insights from this study which might be applicable to other areas in Indonesia.
For instance, it is a well known fact that the Indonesian population is unequally .
Since the Dutch colonial days, various types of transmigra tion have been attempted, and yet popula tion imbalance persists.
The Interregional Labour Force Scheme (Angkatan Kerja Antar Daerah or AKAD) for plantations outside Java has also been implemented with limited results.
However, it appears that the BIP-type of manpower recruitment has the potential, not only to alleviate the problems of unemployment, but also to redress related problems such as population imbalance in Indonesia.
There are several advantages to this method of manpower recruitment over and above transmigration.
Firstly, unlike transmigration, the employment creation process is interregional, and intersectoral.
The workers not only leave the densely populated areas of Java for scarcely popu lated Riau, but they also move away from the traditional agricultural sector to the modem industrial sector.
Thus, unlike transmigration which involves moving poverty from one place to another, the BIPtype of migration is definitely not the case.
The workers would have done their calcu lations .
salaries, fringe benefits, et.
before leaving their home towns and The agricultural sector in Java.
Bali and several provinces in Sumatra are already overcrowded.
the marginal physi cal product of the agricultural workers is approaching zero.
The BIP-type of migra tion will raise the incomes ofthe Indonesian Secondly, the BIP-type of employ date around 250 families or 1,250 persons under a transmigration project, whereas this same land area could accommodate around 15,250 persons under industrial projects such as BIP.
Moreover, friction between the newcomers and the local population would be less likely as the BIPtype of industrial projects do not require that much land area, relatively speaking.
Thirdly, in transmigration, the govermnent expects the migrants to become entrepreneurs who bear the risk and un certainty of their business ventures.
Not all farmers are risk lovers.
most of them are risk averse.
In the BIP-type ofemployment, the workers do not have to bear such risks.
Although these workers are employees, their incomes are high enough that they are even obliged to pay taxes.
Fourthly, the cost of recruitment and settlement of workers to the government in the BIP-type of employment creation pro gramme is relatively low.
This is because private sector companies bear most of the costs of infrastructral development within the industrial townships.
In marked contrast, fortransmigratlon projects, the govermnent must budget not only for the cost ofrecruit ment and settlement, estimated at US$ 16,000perfamily.
tlate 1980s'pricelevel.
in the Bengkulu.
Jambi.
West and South Sumatra bedol desa project, but also for the cost of living for several years.
Finally, from a sociological perspective, industrial projects such as the BIP will ment creation does not need a lot of space for each and every person.
In a typical broaden the horizon of workers and signal to Indonesians that employment opportu transmigration programme, afamily offive is provided with only two hectares of land.
nities exist outside their home towns and An area of 500 hectares could accommo It may not be fair to compare the large scale transmigration projects throughout Indonesia with the more mod est attempts at employment creation in B atam.
Indonesia must create dozens ofthe BIP-type of employment scheme in order to absorb the present level and rate of unemployment and underemployment in Nonetheless,wecanleam from the BIP experience that there is certainly another way to alleviate population unbalance and unemployment at the same The Future Prospect The developments in Batam are too recent for an evaluation.
The BIP started recruiting workers in 1990.
It is beyond the scopeofthispaper to discuss the operational bottlenecks, social issues and political sensitivities that have aleady surfaced in the Batam experiment.
However, the very speed with which the developments in Set within the context of a large country, with a population of over 180 million, the industrial and other projects in Batam may not impact that significantly on employmentlevels in Indonesia.
Neverthe less, the BIP-type of employment creation can serves as a model for developing other parts of Indonesia, providing employment to the unemployed and underemployed, creating indirect employment and other spin offs as well as generating extra tax revenues and foreign exchange.
Impor tantly, the BIP experiment symbolises the determined efforts of two neighbouring countries.
Indonesia and Singapore, in combining their resources, experience and expertise to create - for both countries - a competitive edge to attract international Daftar Pustaka