The value of expatriate experts<\/p>\n
By Idris Kyrway<\/p>\n
JAKARTA (JP): The article by Donna Woodward on expatriates in
\nthis newspaper last Saturday contains some questionable
\nstatements -- but her article has the advantage of bringing the
\nsubject out of the closet.<\/p>\n
Indonesian legislation dealing with the presence of foreigners
\nis not thought through, sometimes ridiculous, in certain cases
\nhighly unfair, and often detrimental to the country's very own
\ninterests.<\/p>\n
When foreign investors choose Indonesia to set up a company --
\neagerly welcomed by the government -- they should have the right
\nto protection and to fully develop their investment. Their main
\npurpose is to exploit an available business opportunity. Charity
\ncomes after success, as in the case of Ted Turner, Bill Gates,
\nand George Soros.<\/p>\n
On the surface the legislation gives sufficient protection.
\nThe investors can appoint foreigners as directors or
\ncommissioners to lead the company. Directors can get a five-year
\nstay and a work permit, renewable and without having to leave the
\ncountry. Yet, until not so long ago even commissioners, except in
\nthe biggest projects, could not get such a facility.<\/p>\n
On the other hand, Indonesia's lawlessness is exemplified by
\nthe fact that even this "favor" is not always guaranteed.
\nIllustrative is the case of the Manulife insurance firm, with one
\nof their managers put in prison while it was clear from the start
\nthat it was mainly the Indonesian partners who should have been
\ngrilled.<\/p>\n
The aim of an investor is to develop a business and to earn
\nmoney. Providing jobs, raising standards of living and education,
\nenvironmental concerns, and so on, are all praiseworthy
\nobjectives, but secondary nevertheless. That's where expat
\npersonnel come into the picture.<\/p>\n
If local and overseas investors were convinced that
\nIndonesians had the same capacities, skills, work ethics, yet
\ncould be employed at a lesser cost than expats with similar
\nqualifications, only cross-cultural differences would stop them
\nfrom doing so.<\/p>\n
If fears of underperforming Indonesians, even when they seem
\nqualified on paper, prevail, then the profit-minded investor will
\nlook for overseas candidates he feels more confident with,
\nbecause of a similar background and of shared concepts of
\nperformance, loyalty, integrity and sense of responsibility.
\n"Overseas" does not necessarily mean "Western". It might be Hong-
\nKongers, Singaporeans, Filipinos, or Thais.<\/p>\n
There is an enormous dearth of really qualified Indonesians,
\nand even those who possess the technical qualifications or the
\nrequired experience don't necessarily have the required work
\nethics.<\/p>\n
A diploma, even from a reputable overseas university, is not
\nautomatically a guarantee of quality, of achievement, of work
\nethics of the highest standards. Academic staff at overseas
\nuniversities tend to be more lenient towards guest students from
\ndeveloping countries. And we know all too well that the quality
\nof universities here in Indonesia differs as night from day.
\nMoreover, diplomas can be bought, also from overseas
\ninstitutions.<\/p>\n
Of course, local talent in Indonesia is present to the same
\ndegree as anywhere else in the world. Yet, this does not mean
\nthat the intrinsically talented people here get the same chances
\nas elsewhere to prove their worth. The only single example of
\none street child I know of who managed to break through the lack-
\nof-education-and-funds barrier is the exception that confirms the
\nsorry rule. This former street boy is now a top manager in a
\ncompany marketing high-end fashion products, fluent in English,
\nwith a remarkably high standard of work morality. But his good
\nfortune has mainly been the result of a chance meeting with an
\nexpatriate journalist who took him under his wing some 12 years
\nago.<\/p>\n
The main flaw in Woodward's reasoning is that her arguments
\ndon't leave enough room for market instincts and market logic to
\nprevail. And market freedom is what is required here. If
\nIndonesians who studied overseas can't find a job back home, it
\nmeans that they have concluded that their best chances for self-
\ndeployment are elsewhere.<\/p>\n
If foreign companies are prepared to pay exorbitant bills for
\nexpats, it means that they feel more assured with higher paid but
\nmore reliable specialists than with local personnel. Even when
\nthis evaluation is at times mistaken, they have a right to such a
\nmisperception. It is after all their money that is at risk, not
\nthe government's.<\/p>\n
Market forces should be allowed to fully play their role as
\nguardians of natural selection and survival of the fittest, also
\namong the business species.<\/p>\n
If a foreign investment (PMA) is 100 percent foreign-owned
\nthere should be no obligation at all to employ Indonesians. This
\nstatement is no different from the conclusion which the
\ngovernment arrived at in the mid 1990s when it dropped the
\nobligation for most PMA ventures to take Indonesian partners on
\nboard.<\/p>\n
The rules of Indonesian shareholdership as well as the
\ndivestment regulation have probably hampered investment more than
\nthey have stimulated Indonesian participation in the country's
\neconomic development, which was supposedly the intention.<\/p>\n
Most of the regulations still in force were drawn up under the
\nNew Order. They were conceived and written by a few individuals
\n-- not after deep, honest and tough deliberations, but to have
\nsomething on paper that would "please" the power-brokers and
\nsomething the foreigners could live with, albeit grudgingly.<\/p>\n
All these conditions of Indonesian shares, training of locals,
\nforeign employment piecemeal, divestment, were lip service,
\nharmful to true Indonesian interests, introduced to placate a
\nlargely illiterate populace and to meet widespread prejudices,
\neven reinforcing the latter: foreign investors as blood-suckers,
\nprofiteers, etc.<\/p>\n
The executioners of these "policies" -- the Investment
\nCoordinating Board (BKPM), manpower ministry, immigration office
\netc. -- were all well aware of this hypocrisy. These officials
\nshowed a much more realistic interpretation of these rules, also,
\nof course, because such flexibility served their own interests of
\ntips and "cigarette money" (uang rokok).<\/p>\n
In other words, and contrary to what Woodward states: The BKPM
\nwas not wrong to do almost nothing in this regard. After all,
\neach expat position pays a US$100 a month just for being here,
\nfunds supposedly to be spent on the training of locals. That
\nmakes $1,200 or a bit under Rp 15 million a year plus taxes. This
\nraises another question: Where does all this money disappear to?<\/p>\n
The conditions for the employment of "technical advisors" is a
\ngood illustration of the ridiculous balancing between placating
\nnative prejudices and the need to accommodate foreign investment.<\/p>\n
On paper again, everything is there: a manpower plan,
\neducation and work experience requirements for the expats, a
\ntraining plan for Indonesian staff, etc. It's on paper. And
\nthat's enough.<\/p>\n
That the rules are not serious, were never intended to be
\napplied as such, is clear from the way that there has never been
\na follow-up by the departments that issued them. To the
\npopulation at large the officials and politicians can maintain
\nthat they have done their job, to the foreigners that "all that
\nis necessary to keep everybody happy".<\/p>\n
Meanwhile, everybody seems to forget that training is a
\nspecialization in itself, and that most experts are not
\nnecessarily born educators.<\/p>\n
Is it the role of foreigners to train counterparts to lead
\nIndonesia's companies and to teach them correct work ethics?<\/p>\n
Not so long ago there was even talk of importing judges from
\nthe Netherlands -- the former colonial power! -- to replace local
\nincumbents in the judicial system. And this idea emanated from
\nthe government itself!<\/p>\n
Moral education is something that goes back to role models in
\na person's youngest years, the quality of the educational system
\nand the prevailing social environment which someone breathes day-
\nin, day-out. An Indonesian at the age of 20 or 25 or 30 won't
\nchange his work ethics anymore because he has been working for
\none or two years as a counterpart of a foreigner.<\/p>\n
At best, he might adjust his heading a bit, but he won't be
\nable anymore to make a U-turn. And when it comes to the
\ntechnical skills part of his job, for most specialities to arrive
\nat a "master" level does not require one or two years, but 10 or
\n20. Those who wrote these regulations just forgot to put a zero
\nbehind the figures.<\/p>\n
Contrary to Woodward's opinion that Indonesia should put
\n"teeth" into its requirements for foreigners to train locals it
\nseems more imperative to let market forces decide.<\/p>\n
Indonesia should invite foreign investors -- and there is a
\nmajority of honest expat businesspeople really concerned about
\nIndonesia's future to make this feasible -- to find out which
\ncompromises are the best for our country, for attracting a
\nmaximum of foreign investment, and for the foreign investors
\nthemselves.<\/p>\n
The writer, a former senior investment advisor to the
\nCoordinating Investment Board, lives in Jakarta and Bali and is
\nnow a political observer and business consultant
\n(kyrway@indosat.net.id).<\/p>",
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