https://asiatimes.com/2023/
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A deadly clash took at PT Gunbuster Nickel Industry (GNI) smelter, North Morowali regency, Central Sulawesi province, January 14, 2023. Photo: Twitter / Independent ObserverJAKARTA – A riot at a Central Sulawesi nickel processing complex, in which two people were killed and buildings and equipment destroyed, has raised questions over the management practices of Chinese companies and what procedures they follow to deal with labor disputes and other Indonesia-specific issues.
Seventy Indonesian workers have been arrested following the January 14 violence at a smelter run by PT Gunbuster Nickel Industry (GNI), one of 18 companies now operating in the sprawling US$10 billion Indonesia Morawali Industrial Park (IMIP).
Hundreds of police were called in after union workers went on the rampage when talks over salary and safety concerns broke down and strike leaders allegedly became enraged after some of the workforce elected to stay on the job.
It is not clear how the two employees, a Chinese and Indonesian, died in the night of violence, but a 100-room dormitory, two dump trucks, a loader and other heavy equipment were destroyed.
Although Chinese firms are often accused of accelerating environmental damage, deepening host country indebtedness and fostering corruption, less attention has been paid to how they treat their workers, including their own nationals.
Government critics believe officials are tempted to treat large Chinese investors are treated with kid gloves because of their contribution to Indonesia’s economic development over the past decade. Chinese investment in 2022 has been estimated at $7 billion.
In earlier years, domestic labor unions complained about large numbers of Chinese workers being brought in, often on tourist visas, to perform even menial work that could be done by unskilled Indonesians.
Safety rules and oversight in Indonesia’s mining industry are considered tight, but the Industry Ministry is only now drawing up guidelines for mineral-based industries aimed at regulating incentives, obligations and rights.
Under current mining regulations, accidents and other incidents must be reported immediately and a mining inspector must be on site within 48 hours in serious cases.
Industry Minister Agus Kartasasmita said nickel smelters play an important role in downstream industry and that it was in Indonesia’s interests to create what he called “a conducive business climate.”
Reuters news agency quoted Chinese Foreign Minister spokesman Wang Wenbin as saying that the Chinese embassy in Jakarta had been in touch with Indonesian authorities seeking a “lawful and appropriate resolution.”
There are about 1,000 Chinese companies operating in Indonesia, around half of them on the main island of Java, according to the Chinese Chamber of Commerce.
This photograph taken on January 30, 2020, shows a health official checking the body temperature of a worker at PT Indonesia Morowali Industrial Park at Morowali in Central Sulawesi. Photo: AFP / StringerGNI was in the spotlight last December after an electrical short circuit triggered an early morning blast at the smelter, killing 20-year-old Tik Tok celebrity Nirwana Selle, a GNI crane operator and her male assistant.
Covering 3,200 hectares and relying on 2,000 megawatts of coal-fired power, the coastal park was established in 2013 as a joint venture between Chinese steel giant Tsingshan Group and PT Bintang Delepan, a local mining and investment firm.
It employs about 56,000 workers, including 5,000 mainland Chinese, and produces about half of Indonesia’s nickel products, underpinning Indonesia’s move into value-added mineral manufacturing and the electric battery industry.
Propelled by a ban on shipments of nickel ore, total nickel export volume last year reached 7o6,000 tonnes, worth about US$6 billion. Most of that is produced at Morawali and similar plants in Southeast Sulawesi and Maluku’s Weda Bay.
Owned by Jiangsu Delong Nickel Industry, one of China’s two largest nickel producers, GNI is a sister firm of PT Virtue Dragon Nickel Industry (VDNI), which operates a separate smelter in the Konawe district of Southeast Sulawesi.
In December 2020, protesting VDNI workers set parts of the plant ablaze after the firm refused their demands to put employees who had been there for more than three years on the permanent payroll and give a pay rise to those who had been there for one year.
While the workers’ demands were in line with two government regulations, one contained in the 2003 Manpower Law, both were erased in the Omnibus Law on Job Creation, which was enacted a month before but which had not yet taken force.
Some of the strongest opposition to the controversial omnibus legislation has come from environmental and labor organizations, who say they are most affected by the efforts of the Joko Widodo government to attract foreign investment.
Months earlier, as the Covid-19 pandemic took hold, workers affiliated with the National Federation of Trade Unions (KSPN) demonstrated against Virtue Dragon importing additional workers from China, the source of the worldwide outbreak.
GNI’s $2.8 billion smelter was opened by President Widodo in 2021 with an annual production capacity of 1.8 million tonnes of ferronickel, a key ingredient in stainless steel making. About 1,300 of the 11,000 workers are Chinese, according to local officials.
Minister of Industry Agus Kartasasmita (far left) together with Coordinating Minister for the Economy Airlangga Hartarto (second left) and President Joko Widodo (third left) during a visit to the PT Obsidian Stainless Steel (OSS) production line, during a series of events for the inauguration of the China-invested nickel smelter factory PT Gunbuster Nickel Industry (GNI) in Konawe, Southeast Sulawesi, in a file photo. Image: Twitter / Doc Palace / Agus SupartoJakarta-based businessmen who have worked with Chinese companies in Indonesia say they make little effort to understand local conditions, apparently relying on local authorities to take care of social and political issues as they arise.
“Many in-country staff appear very poorly informed about their host country risks or how they are perceived and rely heavily on directions and input from their management (in China),” said one. “It is astonishingly hierarchical, beyond what you might imagine.”
It is also secretive. Journalists who seek comment or confirmation of simple facts are met with a wall of silence, as was the case when Tsingshan was initially proposed as the site of a smelter for Freeport Indonesia’s copper concentrate.
That’s because the Chinese executives who run the companies in Indonesia are only at junior management level and take directives from a head office thousands of kilometers away, a situation that does not lend itself to prompt decision-making.
“Those who are aware and knowledgeable are totally bound by management structures and the decisions of higher-ups who know little,” said one foreign consultant who has had first-hand experience of the Chinese method of doing business.
An Indonesian executive also found that few if any of the Chinese staff speak basic English. “They don’t understand, and they don’t want to understand,” he said. “Prospective investors from Australia and other countries at least make the effort.”
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