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Companies will no longer be required to hire 10 local employees for every foreign employee

The government of Indonesia has announced that it has eliminated a regulation introduced in early 2015 that sets restrictions on the number of foreign workers a company can hire.

According to the regulation, firms are required to hire 10 Indonesian employees for every foreign worker. The government also eliminated permit requirements for non-resident directors and foreigners attending work meetings and giving speeches.

“We are hearing suggestions from all sides. We dropped this to support investment because when investors come, they would create jobs,” says Hery Sudarmanto, Director General of Labour Placement Management and Work Opportunity Expansion.

The news was welcomed by several Indonesian startups such as MatahariMall, which sees this as an opportunity to push for growth.

“There is currently a rapid increase in the number of startups formed in Indonesia. The supply of talent is not matching up to the demand. An easing of any restrictive form of foreign talent entry into the Indonesian workforce would mean that supply can now improve to meet the needs of the startups,” says Yiping Goh, Head of Product, MatahariMall.

“We are always open to where the best talents come from,” she stresses.

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Least of our worries

Indonesia’s Central Statistics Agency recently released the new numbers on the unemployment rate in 2015, and the prospects do not look too bright.

Of 122 million Indonesian workforce, about 7.6 million of them were unemployed in August 2015. This is a slight increase compared 7.2 million in the same month last year.

“The economy is slowing, domestically and globally. It just can’t be helped that unemployment rose,” says Darmin Nasution, Coordinating Minister of Economy, as quoted by Jakarta Globe.

The increasing unemployment rate seems to raise concerns, especially combined with the elimination of restriction for foreign workers. However, this does not seem to worry Indonesian startup communities.

Go-Jek recently confirmed that it is opening a new office for its engineering team in Jogjakarta, becoming one of the many startups reaching out to the city for its abundance of local talents.

Even in Jakarta, tech professionals are confident of their skills and employability.

“Not [worried] at all,” says Ayu Septyaningtyas, Fleet Coordinator at Deliveree, when asked whether she felt that foreign workers will be a threat to Indonesian professionals like herself.

“When those people [foreign workers] enter the market, we are already more established, with more understanding of the market. So, no worries at all,” she says.

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Affirmative action?

When asked whether any affirmative action programme for Indonesian tech professionals is necessary, Goh says that it can be gradually balanced out to ensure a good mix of talents.

“Indonesian tech professionals should be given the same chance as any other person when it comes to progress in their career. Locals have the advantage of cultural understanding, local knowledge and common language in the tech workplace, while foreigners can bring a new perspective and best practices from abroad,” she explains.

“Mixed together, [it] presents a solid team.”

Image Credit: picjumbo.com

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