By Ben Otto And I Made Sentana
JAKARTA--Indonesia appears poised to start sending a new message
to foreigners wanting to work in Southeast Asia's largest economy:
Speak the language, or don't bother applying.
The country's labor ministry says it will roll out a rule this
month requiring its more than 68,000 foreign workers--plus any new
arrivals--to pass tests in Indonesian. The ministry hasn't said
what level of proficiency it will demand, only that the rule is
required by law and that it won't make exceptions.
The drive comes, however, after new President Joko Widodo
pledged to lower barriers to badly needed foreign investments, and
it is rattling a foreign business community that welcomed his
election last year.
The language directive is exposing rifts within the new
administration of Mr. Widodo, who last week traveled to China and
Japan to drum up interest in building ports, power plants and other
infrastructure Indonesia can't build on its own. A presidential
policy adviser acknowledged that the language rule "works at
cross-purposes" with the president's foreign-investment objectives,
and Economics Minister Sofyan Djalil told The Wall Street Journal
on Tuesday that it amounted to a nontariff barrier and shouldn't
apply to foreign workers "across the board."
"In principle, we don't want this kind of regulation," he
said.
The rule was set in motion by a law a decade ago. That it is
rumbling to the foreground under Mr. Widodo reflects how hard it is
for Indonesia's leaders to move beyond deep-seated economic
nationalism.
The language requirement is "clearly going to represent a
serious obstacle for foreigners seeking to work in Indonesia for
the first time, " said Bill Sullivan, a legal adviser to mining
companies. He called it "the latest example of growing Indonesian
nationalist sentiment, which is opposed to the employment of
foreigners in Indonesia except where absolutely unavoidable."
Indonesian is spoken nowhere outside the archipelago, though a
similar language is used in neighboring Malaysia and Brunei. Few
foreigners coming to work on temporary assignment have studied
it.
Labor Minister M. Hanif Dhakiri said the move is designed to
control the number of foreigners and aid the transfer of knowledge
and skills to Indonesians.
The rule is aimed specifically at protecting Indonesia against
an influx of foreign labor when a Southeast Asian free-trade pact
takes effect next year. But it will ripple far beyond the region:
The U.S. is by some measures Indonesia's largest single investor,
and China, Japan and South Korea account for half of all
Indonesia's foreign workers.
Reyna Usman, the labor ministry's director-general for manpower
placement and development, also pointed to Australia's demand that
foreigners applying for skilled migrant visas demonstrate
competence in English. "It's a reciprocal thing, nothing special,"
she said.
Still, other countries that compete with Indonesia for foreign
investment--including China, Vietnam, Thailand, Myanmar and
Malaysia--have no language requirements for workers. In Japan,
companies in theory may require foreign workers to speak Japanese,
but the government demands proficiency only of a few hundred nurses
from Indonesia and the Philippines under a regional agreement.
Indonesia's measure could increase costs to companies for
training and lost work hours. Foreign businesses have been cautious
about commenting on the new rule, in part because specifics aren't
yet known.
"There's not enough time for preparation," said Song Yoo Hwang,
director- general of the Korea Trade-Investment Promotion Agency in
Indonesia.
Foreign companies in Indonesia range from the likes of Chevron,
Coca-Cola and Freeport-McMoRan that have been here for decades to
new arrivals such as Uniqlo and IKEA seeking to tap the growing
purchasing power of 250 million Indonesians. Last year, foreigners
poured in nearly $30 billion into sectors not including oil and
gas.
But many companies say the mood is changing. The language rule
follows others that have cut the expatriate workforce from a peak
of more than 77,000 in 2011 to about 68,000. Last year, the local
branch of the American Chamber of Commerce estimated that the
number of foreigners employed by U.S. companies had fallen by 75%
since 2007. The labor ministry attributes much of the fall to
tighter rules imposed since 2012.
Indonesia has declared midlevel banking and all human-resources
positions off limits to expatriates, and recommended shorter visas
in some sectors.
Workers in oil and gas--the greatest source of foreign
investment--face age limits of 55, and jobs such as in-house legal
counsel and procurement officer are no longer open to expats.
Local-language requirements anywhere are a burden for an
industry that relies on moving workers around the world on
different projects, said Craig Stewart, president of the Indonesian
Petroleum Association and country general manager for Salamander
Energy PLC.
The labor ministry dismisses concerns the move will cut into
foreign investment, saying companies ultimately won't view the
requirement as a major obstacle. "We want foreigners to be able to
communicate in Indonesian, not be fluent," said Ms. Usman said.
Spokesmen for Mr. Widodo declined to comment.
Leli Dwirika, a language lecturer at the University of
Indonesia, whose linguists are consulting with the government on
the creation of a language test, said foreign workers could
reasonably expect the government to require what she called
moderate proficiency. A program at the university designed to
achieve that level takes at least seven months to complete based on
classroom study of 15 hours a week, she said. A four-month course
teaches more basic Indonesian.
Amid the debate, the language rule might well get watered down
or postponed; Indonesia has backtracked on similar policies before
at the 11th hour. Either way, it is unlikely to affect the
long-term goals of big investors. U.S. miner Freeport-McMoRan,
Indonesia's largest single source of tax revenue, says it already
provides language training for foreign workers.
Nevertheless, Franky Sibarani, head of Indonesia's investment
agency, said he has asked the ministry to ease off. "For those who
are not communicating with the public, I hope the [labor minister]
can consider exempting them," he said.
Write to Ben Otto at ben.otto@wsj.com and I Made Sentana at
i-made.sentana@wsj.com
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