Better training needed

Better training needed

We are not surprised by the licensing of around 57,160
expatriates to work in Indonesia last year, as announced by
Manpower Minister Abdul Latief on Monday, even though the number
represented a 38 percent increase over 1994. Nor are we amazed by
the estimated US$200 million paid monthly in remuneration to
those foreign workers though we are a little bit puzzled as to
how Latief got hold of the income tax returns of those
expatriates on which he based the estimate of their aggregate pay
for 1994. The tax directorate general is prohibited by law from
disclosing personal income tax returns except with a special
permit from the minister of finance.

We instead see the trend as a logical result of the sharp
increase in the number of domestic and foreign investment
projects licensed over the past three years. We think President
Soeharto's instruction in early August, 1994, on the easing of
restrictions on the employment of expatriates also contributed to
the marked increase in the number of expatriate work permits.

There are, we reckon, several factors which will cause the
number of expatriates to increase steadily within the next few
years.

The first is the flow of foreign direct investments which
bring in new technology. The second factor is the new trend in
the country's industrialization process. As Indonesia is losing
the competitive advantage of its low-cost labor to such
developing countries as India, Pakistan, Bangladesh and China, it
is forced to move up to higher value-added processes of
manufacturing. That means the introduction of new technology
which also requires new skills, new work methods and procedures.
These developments also require the hiring of expatriates at
least for the first few years of operation until locals master
the technology and expertise through training.

Finally there is the consequence of the increasing
globalization of the economy and the export-led growth strategy
pursued by the Indonesian government. Globalization and a general
relaxation of trade barriers have greatly increased
competitiveness in the marketplace. Enterprises, including
domestic ones, must constantly deal with competitive threats and
shifting market demands. As companies regularly adjust
strategically to shifting conditions, new technology will be
introduced. Consequently, employee skills must be upgraded
frequently and fine-tuned to meet the changing strategic focus.

The public education system in Indonesia, as in most other
developing countries, is highly structured and cannot be expected
to turn out workers with the kind of skills and expertise needed
to meet the cutting-edge changes in technology and organizational
strategy now occurring so rapidly. It is nonetheless encouraging
to note that many private education institutions have tried to
take on a greater share of human resource development to counter
the shortcomings of the public educational system. But it will
take time for them to become capable of fulfilling the demand for
the various categories of skilled workers both in the
manufacturing and service sectors.

The government, we think, has pursued the right policy of
restricted licensing of expatriates by requiring companies to
submit manpower plans complete with the scheduling of training to
replace expatriates with locals.

An inordinate sense of suspicion is not warranted. We should
not suspect that foreign firms always try to bring in as many
personnel as possible from their home countries as this suspicion
may result in unnecessary red tape in the processing of
applications for work permits. Too arduous and very costly
licensing procedures may force employers to circumvent the
rulings and ignore their training programs.

We reckon that economic imperatives require companies to hire
as many locals as possible because employing expatriates is much
more expensive than hiring locals.

What really needs tackling in order to resolve this problem is
the educational and training system, to ensure that more
Indonesians are qualified to step into the positions currently
filled by expatriates.