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.