Two expat models show off batik creations. Under the new rules both models would have to pass an Indonesian language test before working in the country. (Antara Photo/Eric Ireng)

Expat Rules Belie Jokowi’s Plan for Foreign Investors


FEBRUARY 20, 2015

An English degree (exactly that — no related fields need apply), a teaching certificate, five years of experience and an HIV test from your country of origin. That’s all you need to get a job with a starting salary of $1,200 a month in Indonesia.

With native-language English teachers needing to fulfill a laundry list of requirements to get a work permit, commercial schools are short of teachers.

“These are the most stringent conditions that are applied for English teachers in the world, hands down,” said Nina Wexler, an American who owns two schools in the city of Solo. “Out of 100 applicants, maybe five qualify. And chances are they will end up taking higher-paid jobs in other countries.”

The government is still raising new barriers, including a plan to require proficiency in Indonesian from foreigners seeking employment in the country.

Red tape, corruption and complicated rules that are often contradictory continue to discourage foreign investment and run counter to President Joko Widodo’s promises to simplify bureaucracy.

Joko is targeting economic growth of 7 percent within three years, driven by increased infrastructure spending and non-commodity exports, both of which will require foreign investment.

Southeast Asia’s largest economy ranked 114th out of 189 in the World Bank’s 2015 ease of doing business survey, almost 100 places behind Malaysia and more than 30 below Vietnam. The three compete with each other to attract foreign investment.

Joko opened a “one-stop” shop for business permits last month. The center brings together representatives from 22 ministries or government agencies to reduce the time it takes to obtain permits from as much as 165 days at the moment.

On a recent morning, about 30 people were waiting to see investment board representatives at the center, which looks onto a traffic-clogged eight-lane highway in Jakarta.

Getting ministries to work together to speed up licenses is “not easy,” said Lestari Indah, deputy chairman of the country’s investment board and in charge of the one-stop shop. “This is a commitment from the president and the ministers, so I think the staff will obey,” she said. “We have to change habits. The target is to reduce the number of licenses.”

The permit process has been “unforgiving” and expensive for Rajesh Laad, who relocated his software business from the UK to Indonesia in 2006.

Originally a one-man-band, Atreus Global now employs around 50 people.

“I find everything difficult here, from setting up the business, having legal documents,” he said in an interview. “You’re still unsure: Are we doing the right thing or not?”

Learning Indonesian

While some efforts will make it easier to do business, other ones won’t help.

The government is pressing ahead with a plan to require foreigners to pass an Indonesian language test before getting a job.

Such a law was needed because other countries require mostly low-skilled Indonesian migrant workers to learn local languages before they depart, Manpower Minister Hanif Dhakiri told reporters in Jakarta last Sunday.

“But foreigners can come here and all they can manage in Indonesian is ‘good morning’ and ‘thank you’ and then they work for years and take up strategic positions,” said Dhakiri, whose mother was a migrant worker in Saudi Arabia for six years when he was a child. “Well, that’s not acceptable. It’s not fair.” He said he expects the law will be implemented this year.

Skills shortage

Countries typically place conditions on foreign workers seeking employment to protect jobs for their own citizens.

The challenge for businesses in Indonesia is that they struggle to find skilled workers, said John Kurtz, president director of the Indonesian operations of consulting company A.T. Kearney.

Out of 65 countries, Indonesia ranked 64th in math and science and 60th in reading among 15-year-olds assessed in 2012 by the Organization for Economic Cooperation and Development.

“What the government sometimes doesn’t realize is that every employer would much rather have qualified Indonesians than hire expatriates,” said Kurtz. “For many many reasons, cost among them.”

The country’s growth strategy depends on a significant increase in skilled labor, some of which will have to come from abroad given domestic supply, said Benedict Bingham, the International Monetary Fund’s representative in Indonesia.

“So how are you going to close that gap?” he told reporters at a lunch event in Jakarta on Jan. 29. It won’t happen with a minister of manpower “focused strategically on limiting competition from imported skilled labor.”

There are limitations on hiring foreign workers in industries ranging from banking to mining and aviation.

Discussing changes

Commercial language schools, which employ foreign teachers to work alongside local instructors, are among the worst affected.

Indonesia is the only country in Asia that requires foreign English teachers to have an English-related degree and five years experience, according to data compiled by the country’s Association of Foreign Language Institutes.

Yusuf Muhyiddin, an official overseeing private language schools at the education ministry in Jakarta, said critics of the legislation “may have a point,” but also said the ministry has to follow the regulation.

The ministry is open to discussing changes to the rule with language schools, he said.

English First, which operates globally and runs 66 schools across Indonesia, found only 215 instructors who were qualified out of 2,205 prospective candidates in 2014, said Juli Simatupang, the company’s director of corporate affairs.

Of those only 26 joined the company, she said.

Joko said investors have told him they want bureaucratic reform and ease of permits with the one-stop shop.

“This will build the trust to the investors that there is a good opportunity, there is a better investment climate in Indonesia,” Joko said in an interview this month. “We must invite FDI.”