Paying foreigners affects balance of payment: Expert

JAKARTA (JP): The $2.4 billion in total salaries paid to foreigners working in Indonesia each year is contributing to the country's soaring balance of payment deficit, an economic observer said.

"The presence of expatriates is one of several factors contributing to our balance of payments deficit, besides freight and insurance services payments," Polin Pos was quoted by Antara as saying in Medan, North Sumatra yesterday.

Polin said the amount paid to expatriates' was catching up to the annual $3.1 billion worth of exports from North Sumatra.

He predicted the number of foreigners working in Indonesia would grow with the advent of free trade within the Association of Southeast Asian Nations in 2003, and the Asia Pacific Economic Cooperation (APEC) forum in 2020.

Indonesia suffered a more than $200 million deficit in its balance of payments in the first semester of the 1996/97 fiscal year between April and October, according to the Ministry of Finance. The deficit is caused largely by a huge deficit in the services accounts.

The Ministry of Manpower estimated in January last year that based on their tax returns, the total wage bill for the 57,100 registered expatriates came to nearly $200 million, or $2.4 billion a year. By comparison, total remittances of salaries of Indonesians working abroad amounted to only $100 million a year.

Polin called for greater efforts in Indonesia to equip its workers with skills to compete with the onslaught of foreigners.

Strengthening human resources development could be an effective means of keeping the balance of payments. The country needed more professional workers to fill positions now held by expatriates, he said.

He called for a complete overhaul of the management of human resources development.

The Ministry of Education and Culture should be revamped into one ministry handling only education and training. Cultural affairs, he said, could be incorporated into other government agencies, probably a new ministry handling tourism and culture.

This would enhance the government's "link and match" concept of trying to gear education to the needs of industry, he said.

"As long as the Ministry of Education and Culture remains a separate part of the Ministry of Manpower, I think the quality of our human resources will remain the way it is.

"Training, and the government's vocational training centers, will continue to be alienated from education," he said, noting that many government agencies were running their own training centers when these should ideally be run by the proposed ministry of education and training.

Polin called on the government to deregulate the education sector and to give fiscal incentives to encourage private institutions to set up and manage colleges and schools.

He suggested the country establish more polytechnics as part of strengthening human resources development. (emb)