EXECUTIVE SUMMARY

• A recent conflict between Indonesian workers and Chinese workers in North Morowali Regency brings into focus several issues concerning Chinese investments in Indonesia, poor working environments, and bad treatment of local workers.
• Three factors underlie the escalation of labour discontent into violent conflict: Ethnic and cultural differences, poor governance in labour relations and the role of external actors in using the situation to undermine the government’s policy.
• The conflict in North Morowali, if left unresolved, may deter Chinese investors from coming, and this would hinder the government’s plan to build the world’s largest nickel industry on the island.
• Authorities must carefully manage the issue of migrant workers and balance national policy goals with local communities’ interests. It needs to pay attention to some cultural and political factors that have complicated industrial relations in some Chinese-managed companies in Indonesia.
• The most immediate issue to tackle is the enforcement of labour regulations, specifically the improvement of workers’ safety and their working environment, as well as adjustment of workers’ salaries. Such measures would significantly reduce the potential for future industrial conflict.