FOR companies worried about a new Indonesian law requiring 10 locals to be hired for every foreigner, the government has a workaround: stock up on drivers and “office boys” to make tea.
“There is no need to be afraid,” Ruwiyono Septy Priharso, head of the work permit section at the manpower ministry, told an audience of mostly foreign business people at a seminar on the rules. He suggested the quota could be filled by low-paid staff like office boys, a term that refers to mostly young men employed to do routine tasks.
“They do not need to be permanent workers, but it is better if they are.”
The rules, first unveiled in July, are undermining appeals by President Joko Widodo for foreign direct investment (FDI) to help lift an economy growing at the slowest pace since 2009. The president, who has promised to cut red tape and is courting China to build infrastructure, may be facing a pushback by trade unions worried about rising unemployment in the world’s fourth-most populous nation.
The manpower regulations also require non-resident foreign company directors to obtain a work permit, a process that can take weeks and needs to be done within the country. International staff now need to get business visas in advance to attend internal meetings in Indonesia, do training, or for emergency jobs such as fixing machinery.
One stage in the visa process requires applicants to conduct a Skype interview with manpower officials. Mr. Priharso acknowledged that technical issues and a lack of staff were making this process difficult, causing a backlog.
“The latest regulations contradict the claims that Indonesia wants to create an FDI environment that is more attractive than its Southeast Asia neighbors,” said Chris Wren, the executive director of the British Chamber of Commerce in Indonesia. “Some members are already planning to host regional meetings in Singapore rather than Indonesia.
Some UK businesses that were considering Indonesia as a regional hub are having a re-think.”
The rules follow a series of other protectionist measures and policy u-turns this year. Trade Minister Tom Lembong, a former private equity manager who has reversed some policies since his appointment in August, said the restrictions on foreigner permits and local worker quotas is “a big problem” being created by bureaucrats.
“For every one expat worker who comes in, that person creates between three and 12 jobs,” Mr. Lembong said in an interview last month. “You have to understand this is not coming from the president.”
The backlash against foreign workers has come despite a shrinking number in the country. Out of a total work force of more than 100 million, there were 54,000 registered foreigners as of August this year, down about 30% from 2012, according to the manpower ministry. The largest group, numbering 13,000, are from China, it said.
Mr. Widodo is looking to increase Chinese investment to build railways, power stations and dams, and local media have expressed concerns about an “invasion” of foreign labor.
“The central government looks at the economy, but regional governments need to protect the jobs on their patch,” said Said Iqbal, president of the Indonesian Trade Union Confederation. “These rules are the only ones able to prevent the Chinese from coming in droves.
They are a threat to Indonesian workers.”
Around 43,000 workers in Indonesia lost their jobs between January and September after cuts by industries such as garments, footwear, electronics and coal, the Bisnis Indonesia newspaper reported, citing Haiyani Rumondang, a director general at the manpower ministry. -- Bloomberg
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