by David Knowles
HR and Education Focus Group Objectives
Objectives of the group are to provide inputs and opportunities for members and UK exporters to take advantage of the Group’s networks and country knowledge regarding HR and Education issues and opportunities. As the sector representative of EuroCham, it has the potential to be a bridge between companies and the Indonesian government on HR issues. Our regular Position Papers update members on current changes to HR related legislation and other issues – see more below.
HR and Education Focus Group Highlights from 2015-16
In April 2015, Chairman BritCham HR and Education Group chaired Developing the Leadership Skills Required for the Next Generation of Indonesian Talent, a EuroCham panel discussion.
The year also saw development in the professional development side which were welcomed by the HR and Education Focus Group, the continuing growth of ACCA and CIMA, and the advent of ICAEW.
Further evidence of British intent to contribute to the Education and Development scene in Indonesia is the establishment of a representative office here by Coventry University.
Recognising the growth area in Education and Training, the group hosted a morning networking session in May 2016 centred on keynote speaker Jaka Singgih, CEO of PT Bumi Laut, and lifelong ‘student’, with a strong preference for British Education and Professional Development.
2015 saw an increasingly challenging business environment, and as is often the case, HR programs and projects were among the first to be curtailed in a ‘cost-saving’ spree. While this should be an opportune occasion for fine-tuning the workforce, enhancing productivity and consolidating engagement and morale, it is more a ‘last in first out’ approach to workforce management. The downturn in this sector, and others, continues to have a negative impact on the employment of expatriates. One might therefore expect to see a concomitant focus on accelerating professional development among the Indonesian workforce to balance the loss of expatriates, but this logic does not seem to prevail in most companies.
HR and Education Focus Group: Investment Opportunities
E-Commerce was thought to offer a more open field for investment from overseas, as opposed to the constraints of working within the state educational system. Recent announcements of more restrictive approaches to regulation of e-commerce might also affect the provision of education and development. However at this stage, the definitions are not tight, there are many diverse government bodies involved who are not yet coordinating with each other. So the field may remain open by default. We expect to see more British tertiary educational establishments make overtures to Indonesia on a bi-lateral basis, and forming their own networks and contacts. The development of certified online courses for ‘credits’ from overseas universities is still largely in the future, but will certainly arrive in the next few years.
So far as international schools are concerned, there has been interest in investing but the competition and the difficulties in repatriating profits given the required structure of such schools, has led to a lack of substantive foreign investment in this area.
The new Negative Investment List which was just made public in May 2016 does not appear to have made any significant changes to foreign investment in the education sector.
HR and Education Focus Group: Update on HR Legal Developments
From an HR/employment legal viewpoint, 2015 raised a number of concerns and challenges for British business investors in Indonesia – and 2016 appears to be following in a similar vein even if there are no major changes to important manpower legislation planned for 2016.
The replacement of Jamsostek by the National Social Security System (SJSN) and the introduction of BPJS Health and BPJS Manpower components has increased operating costs, especially as expatriate participation in the scheme appears to be mandatory. The annual increase in the minimum wage has also reduced competitiveness.
Whilst issues relating to outsourcing remain, enforcement of the strict outsourcing restrictions did not seem to happen to any great extent in 2015. In addition, the increase of economic protectionism has led to restrictions on and difficulties with the issuance and renewal of expatriate work permits, especially in the energy and mining sectors.
Although the planned Bahasa proficiency tests for expatriates appear to have been scrapped, certain Manpower officials have been trying to insist that foreign directors (but not commissioners) resident overseas hold Indonesian work permits, even though this is not a strict legal requirement. There are rumours that a new law will require all directors to be Indonesian residents. The prohibition on expatriates dealing with HR and employment matters was still a very relevant issue in 2015 and will continue to be so in 2016.
2015 gave businesses no improvement in the area of employment termination, which is very often costly, time consuming and uncertain. Execution of a mutual termination agreement with the departing employee(s) remains the preferred course of action, even though the compensation payable in such circumstances may be higher than is strictly required by law. With expatriate terminations in the oil and gas industry being widespread, the importance of structuring expatriate employment remains an important matter in order to ensure that any potential problems emanating from such terminations are minimized.
The introduction of the Currency Law and whether/how expatriates can be paid in foreign currency, is still an argued issue, although it does not appear that this matter is being enforced by the authorities to any great extent. Likewise, compliance with the Currency Law in the area of expatriate remuneration has not been consistent.