Page 35 - e-KLIPING KETENAGAKERJAAN 27 OKTOBER 2020

JOB CREATION LAW TO EASE RECRUITMENT OF FOREIGN WORKERS

Red tape, expense main obstacles to hiring expat staff

Business consultancy owner John, 55, who is from the United States but has been running his
business in Indonesia for the past 10 years, has said he would consider employing foreign
workers if his business grows. However, he said that employing foreigners in Indonesia was a
relatively unattractive option given its high cost barriers.

Apart from it being more expensive to pay for their services, the vast administrative procedures
to follow, reports to submit and licenses to secure for entering, staying and working in Indonesia
have made the overall experience just that much more complicated. Therefore, it would be
useful to streamline the process and make it more convenient for businesses to hire foreigners,
especially when it comes to foreign investors, he said.

“You can’t attract foreign investment if you don’t allow foreign investors to send in trusted and
experienced business managers to oversee their investments,” said John, who requested not to
use his full name.

Indonesia, keen to attract more foreign investment by loosening the screws on labor limitations,
is happy to allow business owners like John bring in more foreigners to work in the country. But
the perceived negative sentiment against foreign labor and decades-old legal barriers have
limited the scope of investment in this space — a problem the government seems intent on
solving with the Job Creation Law.

Hadi Subhan, a labor issues expert from Airlangga University in Surabaya, East Java, said the
jobs law looked to ease existing restrictions on employers hiring foreigners, by only requiring
them to submit their expatriate employment plans (RPTKA). Previous regulations required
employers to submit both their RPTKA and an expatriate employment permit (IMTA) in order to
be able to hire foreigners.
“De-bureaucratization will impact investors’ willingness to sink funds into Indonesia, as they
would not only be able to put in their money but also bring in workers [of a certain expertise
level],” Hadi told The Jakarta Post on Tuesday.

He also noted the tax break stipulated in Article 111 of the law – in one of the latest iterations
of the elusive text that is still circulating unofficially – would further incentivize foreigners to
work in the country. The article stipulates that foreign workers with “certain skills” can have
their income tax waived for four years from the moment they are subjected to the local tax
system.

The new provision does not harm the local workforce, at least not indirectly, Hadi suggested,
unlike the severance pay revisions in the law that apply to every worker.

Besides, the number of foreign workers is still relatively small when compared to the national
workforce, he added.

Indonesia currently has close to 100,000 foreign workers, according to Manpower Ministry data
quoted in an interview with Kontan in May. More than 35 percent of that figure originates from
China. The number is relatively small compared with the nearly 138 million people in the national
workforce as of February 2020, Statistics Indonesia data show.

However, the presence of foreign workers is not always readily accepted, with some sections of
the population still wary that jobs could be taken away from them.

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