March 19, 2025
JAKARTA – Two coconut processing companies based in Riau have laid off a total of 3,500 workers as they struggle to maintain production in the face of a shortage of the fruit as a key raw material.
The news was brought to the surface by an Instagram post that mentioned PT Pulau Sambu or Sambu Group who laid off 1,700 workers on top of PT Riau Sakti United Plantations who axed 1,800 workers who had been working for under 5 years.
Confederation of Indonesian Trade Unions (KSPI) chair Said Iqbal said on Sunday that the news was true and stated that the layoffs were due to a coconut shortage that pressured the companies’ production.
“[The layoffs] are true. We have checked it. It was because of a shortage in raw materials. I have checked it with KSPI Riau,” Said was quoted as saying by Bisnis.com.
The shortfall of coconuts was caused by extreme weather changes and pests, as well as an export policy that was said to disrupt domestic supply.
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Statistics Indonesia (BPS) noted that the archipelago exported 71,077 tonnes of endocarp coconuts in this year’s first two months, valued at US$30.8 million.
China was responsible for the lion’s share of 68,065 tonnes, followed by Vietnam at 2,180 tonnes and Thailand at 550 tonnes.
Last year, Indonesia exported 431,815 tonnes of coconuts, a rise of over 13 percent from 380,883 tonnes in the previous year.
Affected workers have received information that the companies have agreed to pay off compensation, but would also consider rehiring when the raw material supplies stabilize.
Deputy Manpower Minister Immanuel Ebenezer Gerungan said he had not heard about the layoffs, but he did not deny it either, as reported by Bisnis.com on Sunday.
“I have just heard about that information, we’ll check it. If it’s a raw material crisis, that happens a lot; importing is difficult,” said Immanuel before laying accusations that the Customs and Excise Office was often involved in hindering the process of raw material imports.
Immanuel ensured that his office would verify the information given that the companies absorbed a lot of workers.
Trade Ministry official Farid Amir said on Sunday that coconut production was dropping because of El-Nino.
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“Because of El-Nino, coconut production in Indonesia went down. Simultaneously, there was an increasing demand in the global market, causing raw material supply for [the domestic] coconut processing industry [to be] scarce,” Farid was quoted as saying by Bisnis.com.
He went on to explain that coconut exports have never been regulated or restricted because demand and supply have always been in balance.
However, he assured that the government has agreed to impose a levy on coconut exports and derivatives.
The government has taken into consideration the industry’s proposal of an export moratorium, but Farid said it would need further deliberation.