More on expatriate employees

By Donna K. Woodward

MEDAN, North Sumatra (JP): Following Nirwan Idrus's article "Not all Expats are Experts" in this newspaper, there were a number of items questioning Indonesia's use of expensive foreign consultants and international aid experts.

To know just how expensive foreign "experts" are, we have several government sources. The Indonesian Bank Restructuring Agency acknowledged that in 2000 it spent Rp 235 billion, two- thirds of its budget, on foreign consultants.

Chief economics minister Rizal Ramli stated that foreign consultants consumed 30 percent of the government's budget for state projects. Replacing foreign consultants with qualified local professionals will have several obvious benefits. It will save the government money. It will increase work opportunities for Indonesian professionals, many of whom now prefer to work overseas because of the limited opportunity here for well-paid employment. And when income is channeled to Indonesians, more will presumably be circulated within the local economy.

While reconsidering the reliance on foreign professionals, there is another issue for review: the prolonged employment of foreign managers and consultants within companies. When a company applies for approval to employ a foreign worker it must designate a local counterpart to be trained to replace the expatriate within a foreseeable number of years, which may vary depending on various factors.

Theoretically this means that the company has a skills transfer plan in place, and that the expatriate consultant/manager/technical expert shall prepare the local counterpart to take over the position. But theory is different from reality. A glimpse around shows that expatriates remain ensconced in their positions for five, 10 or more years.

Where is the skills transfer? When will Indonesians be considered ready to take the management reins from their foreign mentors?

The answer, if we are honest, is "Not very soon." Few companies have a credible skills transfer program in place. They are lucky to have even a pro-forma program. Sometimes a foreign manager departs after several years and is replaced by another foreign manager, and another, and another. There may be justification in a particular company for a permanent expatriate head.

A wholly-owned foreign company may insist on appointing expatriate managing directors. But how many positions should be reserved for foreigners, and for how long, especially now that Indonesia has so many overseas graduates who remain overseas rather than return for low-paid employment?

The Investment Coordinating Board, whose responsibility it is to monitor the replacement of foreign with local talent, does almost nothing in this regard. This is not to criticize the Board's staff. On the contrary they are enormously helpful to investors and work permit applicants. They may not want to ruffle the feathers of investors by questioning the work permit extensions requested year in and year out.

Perhaps as they process work permits they also wonder, "Again?" Rather it is to question the discrepancy between what the stated national policy is, and what the reality is. If as the government says the object of using foreign workers is to prepare Indonesians to assume high level positions, then let's see some bona fide skills transfer programs in place.

Let the government question lack of progress and review the operations of those companies who make no effort to replace foreign managers with Indonesians. And let all this happen transparently and without the usual opportunities for companies to avoid responsibilities by payoffs.

There are two other sides to this multi-dimensional issue. One is that insofar as Indonesia does need and approves the use of expatriate workers, the bureaucracy should be more accommodating to us. Instead of maintaining the current obstacle course of redundant paperwork, passport copies and photographs, why not simplify the procedures for expatriate residents?

Instead of treating expatriates like a trespassing criminal presence whose every movement needs to be "legitimized", make the system more user-friendly. If the bureaucracy becomes less burdensome for foreigners, there might even be a spillover effect for Indonesians.

The other side of the issue of foreign versus local managers is one touched on by Nirwan and several Indonesians who responded to his article. That is the work ethics of Indonesians. In general there is little vertical trust in companies between top management and the underclasses. Many Indonesian and expatriate company directors lack confidence in the work ethics of Indonesian managers.

Never mind that some expatriates may have questionable business ethics also, tacitly condoning violations of safety, environmental, and child labor laws; approving unofficial payoffs to officials to accomplish business objectives; and even promoting nepotism by importing their family members from overseas to work with them. (Just what Indonesia needs!)

One of the roles of expatriate managers and professionals ought to be to handle ethical issues that arise. This is not a superfluous responsibility. It is essential to the obligations of any manager to nurture work ethics in an organization. Especially in Indonesia where the need for better work discipline and ethics is repeatedly cited, a prerequisite for expatriates' continued employment ought to be that they set ethical standards and strengthen their Indonesian counterparts in complying with them.

One thing that keeps developing countries subservient is dependence on foreign aid, including foreign managers. The G-7 countries still employ foreign professionals and managers; developing countries certainly need to.

But let Indonesia do itself a favor by ensuring that the country gets all possible value from expatriate consultants and managers by putting some teeth into the requirement that they prepare Indonesians to lead Indonesia's companies, including in work ethics.

The writer, an attorney and former American diplomat at the U.S. Consulate General in Medan, is a management consultant.