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Indonesia cuts back on expat workers
Publication Date : 16-09-2013
A regulation introduced early last year tightening recruitment of foreign workers, coupled with more restrictions planned for next year, will further reduce the number of expatriate workers in the country.
Since the government closed off 19 types of jobs to expatriates last year, their numbers have declined by 6 per cent, or 4,880, to 72,427 compared to 2011, according to data from the Manpower and Transmigration Ministry.
Technical jobs contributed to the steepest decline, followed by managerial and professional jobs.
The decline was in contrast to the record rise in realised foreign investment (FDI) last year, which reached the unprecedented level of 221 trillion Indonesia rupiah (US$22.1 billion), or 26 per cent higher than in 2011.
“Soaring FDI no longer means a higher intake of expatriates,” said the ministry’s director general of labor placement and advisory, Reyna Usman, recently.
“Since last year, we have introduced a restriction in the recruitment of foreign workers. That explains the decline,” she said.
The restriction was aimed at providing more opportunities to develop local human resources, especially in mid-level positions.
Indonesia’s rapidly growing economy has increased business profitability in recent years, prompting demonstrations by workers demanding better positions and higher salaries.
Unemployment among the better-educated in Indonesia is among the highest in Asia. Full- and part-time unemployment among this section of the workforce amounts to more than 10 percent, according to the Central Statistics Agency (BPS).
“We are tightening up on [expatriate] permits because we think that there are many Indonesians who are well qualified for the jobs,” said Reyna.
“There should be no worries over the restriction as it has not hindered the operation of foreign companies here. They usually agree to comply with our request to employ local workers.”
Between January and August this year, the ministry had only issued 48,000 permits for foreign workers.
While figures for the same period last year are not available, Reyna forecast a further decline this year.
During the period, the foreign workers being granted permits were dominated by Chinese nationals at 10,291, or 21.4 per cent of the total. This high take-up was because most imported capital goods, such as machinery and equipment, came from China, according to the ministry.
Japanese nationals account for the second largest group at 9,788, followed by South Korea at 6,013.
The industrial sector has the highest recruitment of expatriates, according to the ministry, followed by the trade, construction, mining and oil and gas sectors.
The ministry, according to Reyna, expects a further decline in the number of expatriates next year as it will introduce a new set of rules to protect local workers ahead of the Asean Economic Community (AEC) that will come into effect in 2015.
Under the framework, Asean member countries Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam are slated to gradually lift restrictions on labor movement within the region.
“The rules are already in the pipeline. We are still working on the details of next year’s restriction,” said Reyna.
Labour observer Payaman Simanjuntak said that even though the number of expatriates might decline this year, the AEC would provide leeway for the arrival of more foreign workers, particularly from Singapore, Malaysia, Thailand and the Philippines.
He urged the ministry to come up with further regulations to protect the domestic labour market.
“The requirement to transfer skills and technology is a good policy, but it has yet to be optimised to boost our workers’ skills due to a lack of commitment by companies,” he said.