Two major Japan-based electronics companies, Toshiba and Panasonic, have ceased all operational activities in their manufacturing plants in Indonesia. Toshiba has already closed its television manufacturing plant in Cikarang (West Java) and sold it to China-based Skyworth late last year. Reportedly, this was Toshiba's largest television manufacturing plant outside Japan. Meanwhile, Panasonic is to close its lighting manufacturing plants in Pasuruan (East Java) and Bekasi (West Java).
For an updated story on this topic see Panasonic & Toshiba Restructuring its Business in Indonesia
Said Iqbal, Chairman of the Confederation of Indonesian Workers Union (KSPI), said both Japanese companies have already ceased all operational activities at their local Indonesian plants. Currently, Toshiba and Panasonic are negotiating with their workers about severance payments. The decisions to close the total of three plants are estimated to result in 2,500 layoffs.
Indonesia's unemployment rate has already been on the rise amid Indonesia's economic slowdown. Based on the latest data from the nation's statistics agency, unemployment in Indonesia rose to 6.18 percent of the labor force in August 2015 (or 7.56 million people in absolute terms), from 5.81 percent (or 7.45 million people) in February. Meanwhile, Indonesia's manufacturing activity has been contracting for 16 straight months as domestic and global economic growth remains subdued, while the weaker rupiah rate made imports of raw materials more expensive.
About a month ago it was announced that Toshiba sold its local Indonesian unit Toshiba Consumer Products Indonesia (which manufactures TVs and twin-tub washing machines) to China-based Skyworth. This agreement also gives Skyworth a license to use the Toshiba brand name throughout Asia (but excluding China). The transfer is to be completed in March 2016.
Meanwhile, Panasonic Lighting Indonesia (the local unit of Panasonic) will close its two lighting manufacturing plants in Indonesia. The company, which has been in Indonesia since the 1990s, was originally established to manufacture lamps for the Japanese market. Ali Soebroto Oentaryo, Chairman of the Indonesian Electronics Association (Gabel), said the company's competitive advantage declined as it failed to engage in innovation. He expects that these factories will be sold to Chinese investors too as the world's second-largest economy is currently the leading lighting manufacturer. This move would only require some re-branding.