Indonesia Vows Aggressive Defense to Halt Japanese Auto Component Exit

JAKARTA, Investortrust.id — Indonesia is aggressively maneuvering to protect its automotive manufacturing base after two major Japanese component suppliers signaled intentions to move operations to Vietnam. The potential exodus threatens to displace approximately 7,000 workers, prompting a swift vow from the government to prevent the manufacturing shift.

The automotive sector remains a pillar of Indonesia’s industrial manufacturing economy. Any large-scale relocation of component producers to regional rivals like Vietnam risks triggering a domino effect in the domestic supply chain, undermining the government's long-term goal of becoming a global automotive manufacturing hub. Government intervention is now focused on ensuring that East Java retains its competitive edge against Vietnam’s lower-cost production landscape.

Said Iqbal, the Special Presidential Advisor for Labor and Welfare, confirmed the administration is actively engaging with the firms, identified only as PT J and PT S. While the companies have floated the idea of moving, Iqbal insists the plans are not yet finalized. "It is still in the discussion phase. I am not entirely convinced that 4,000 workers will be laid off, because this is just talk so far," Iqbal said following the 2026 National Working Meeting of the Confederation of Indonesian Trade Unions (KSPI) in Jakarta on Tuesday (6/23/2026).

A Window for Negotiation

The scale of the threat is significant, with PT J potentially cutting 4,000 positions and PT S reportedly eyeing up to 3,000 job reductions. However, officials believe the relocation is not imminent. By leveraging diplomatic channels and labor-management talks, the government aims to secure a commitment from Japanese principals to maintain operations within Indonesia for the foreseeable future.

"This relocation is not easy, and it won't happen overnight," Iqbal emphasized to reporters. "They mentioned a timeline of 1 to 2 years ahead. That means we still have a window to negotiate." The strategy centers on convincing Japanese corporate headquarters that Indonesia remains a superior long-term partner compared to alternative regional production hubs.