Indonesia aims to cut expat workforce


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Move to favour locals could deter foreign companies: expert

 

Indonesia is looking at finding more ways to ensure that qualified locals land jobs that would otherwise go to foreigners, Manpower Minister Muhaimin Iskandar said.

Last year, it listed 19 human resources-related positions that foreign professionals were barred from taking up.

Muhaimin told the Straits Times that the aim is to get employers to consider an Indonesian candidate before a foreign one, especially for professional and managerial posts. The details are being worked out, he added.

The move comes amid concerns that locals are being passed over for foreigners and at a time when neighbouring countries are also reviewing regulations on the hiring of expatriates.

Last month, Singapore announced several measures aimed at giving its citizens a fair shot at landing professional, managerial and executive (PME) posts.

“We will do something similar,” Muhaimin said yesterday.

Overall, Indonesia still welcomes foreign professionals who can offer valuable know-how and contribute to the local economy, but it has also been introducing measures gradually to help locals land PME positions.

The ruling on HR-related positions last year has had some effect, but the number of foreigners issued work passes remains high because the curbs are “being offset by the rise in foreign investments”, said Muhaimin.

The Manpower Ministry said late last month that Indonesia would remain open to expatriate workers but stressed that their recruitment must bring about a transfer of knowledge.

“Their presence must be viewed positively because they will help Indonesian workers directly absorb skills and abilities,” the ministry added.

Some 48,000 work permits were issued in the first eight months of this year. In total, 72,427 were issued last year and 77,307 in 2011, according to Manpower Ministry data.

Expatriates interviewed felt that even though the restrictions could widen opportunities for well-qualified local talent who meet the requirements of foreign companies, they could also make potential investors think twice about entering Indonesia.

“When operating abroad, many firms like to keep their nationals in certain key posts,” said Christopher Foss, the general manager of Car Keys Indonesia, which advises auto firms.

These firms hire locals for less senior posts and let them work their way up the ranks, he added.

“This regulation might cause these companies to think twice about the investment climate, and whether their business would be affected if they have to go through a prolonged recruitment process when qualified workers are readily available in their own countries,” he said.

Indonesia’s existing manpower laws restrict foreign hires to mostly white-collar jobs and require them to renew their work permits annually. Companies have to explain why only a foreigner can fill the job vacancy and declare what skills and expertise he has that locals do not.

Moreover, employers must ensure that each foreign hire has at least two local deputies or managers to whom he can transfer his expertise or skills, an official at the ministry’s directorate-general of labour placement told the Straits Times.

Most of the expatriates here come from China, which accounted for 16,731 of the permits issued last year. They are followed by those from Japan, South Korea, India and Malaysia.

Ron Mullers, an American who has lived here for 40 years and works in the mining and hospitality sectors, said Indonesia still needs foreigners to fill gaps in the workforce.

“Very smart Indonesians get jobs abroad – a lot of them go to Singapore – or have their own business. It’s a brain drain,” said the 60-year-old who is an Indonesian permanent resident.

“Protectionist measures are always counterproductive for business,” he added.

Some 48,000 work permits were issued in the first eight months of this year. In total, 72,427 were issued last year and 77,307 in 2011, Manpower Ministry data shows.

Most of the expatriates come from China, which accounted for 16,731 of the permits issued last year. They are followed by those from Japan, South Korea, India and Malaysia.

Indonesia’s existing manpower laws restrict foreign hires to mostly white-collar jobs and require them to renew their work permits annually. Companies have to explain why only a foreigner can fill the job vacancy.

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