Indonesia Proficiency Test Requirement for Foreign Workers is Abolished
Indonesian President Joko Widodo wants to drop the regulation that states a foreign worker needs to learn Indonesian. On Tuesday 21st of August, Cabinet Secretary Pramono Anung said President Widodo (often called Jokowi) requested Hanif Dhakiri, Indonesian Minister of Manpower and Transmigration, to revise this regulation (that was issued in 2013). According to Jokowi the language proficiency requirement would make Indonesia’s investment climate less competitive and could therefore hamper much-needed investment.
Manpower Minister Hanif Dhakiri on Monday 31st of August confirmed that the draft regulation has been abolished as many foreign investors had complained about this language proficiency requirement. The Indonesian government has high hopes for (foreign and domestic) investment. As domestic consumption has been sluggish (due to the high interest rate environment, weaker purchasing power, and slow government spending), enhanced investment realization should be the key to overcome the current ongoing process of slowing economic growth.
Despite the language requirement had been dropped and thus may lead to more foreigners entering Indonesia, companies hiring expats are required to ensure that these foreign workers will transfer knowledge and skills to the local Indonesian staff members.
As such, the Bahasa Indonesia language proficiency test was designed in a bid to somewhat curb the flow of foreign workers into Indonesia. The Indonesian government recently also issued regulation number 16 of 2015 on the Procedures to Employ Expatriates in order to curb the number of foreign workers after implementation of the AEC. For example, the ratio foreigner-local employee was raised from 1 (foreigner): 3 (local employees) to 1:10, meaning that for each foreign worker a company needs to add ten Indonesian workers.
The Bahasa Indonesia language proficiency draft regulation was designed with the implementation of the ASEAN Economic Community (AEC) in mind. The AEC will become effective at the end of 2015 and is to make the ASEAN region into one single market and production base (also implying a freer flow of skilled labor). Indonesian policymakers were concerned that the local population would not enjoy the fruits of job creation generated by increasing foreign direct investment (FDI) as it would be too easy for local companies to hire expats.