Indonesian labor officials appear to be trying to wriggle out of strict interpretation of a July law mandating that multinationals hire 10 locals for every foreigner, a law that is cutting severely into President Joko Widodo’s aspirations to lure foreign direct investment.
In addition to the hiring mandate, the law requires nonresident foreign company directors to obtain work permits, a process that typically is stalled for weeks or even months. International staff also need business visas in advance to attend meetings, train staff or take care of emergencies even including equipment breakdowns.
But, said a western businessman: “Out of a total workforce of more than 100 million, there were 54,000 registered foreigners as of August this year, down about 30 percent from 2012, according to the manpower ministry. The largest group, numbering 13,000, are from China. We have all been up in arms about it. This is so stupid I can hardly breathe.”
The Indonesians, he said, “now want to require non-resident directors of Indonesian companies to obtain resident work permits even if they do not live in Indonesia and have no intention of living in Indonesia,” the businessman said. “This seems to apply even to foreign-owned Indonesian companies. I have to obtain a visa to go to Bogor.”
In an apparent effort to soothe the international community’s ruffled feathers, Ruwiyono Septy Preharso, the head of the work permit section of Indonesia’s Manpower Ministry, held a seminar for mostly foreign businessmen, during which he said the regulation doesn’t mean the 10 Indonesians have to serve on the same level or in the same capacity as expatriates.
“There is no need to be afraid,” he was quoted by Bloomberg as saying. The quotas, he said could be filled by low-paid staff like menials. “They do not need to be permanent workers, but it is better if they are.”
With multinational companies furious at the restrictions and threatening to limit their activities in the country, the president is on his way to Washington, DC and the US west coast in mid-October to proselytize investment in the country, whose annual gross domestic product increase has slipped to 4.67 percent annually, the lowest level since 2009, and which increasingly needs investment from overseas to prop up the economy.