Paying foreigners affects balance of payment: Expert
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)