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NEWS UPDATES Asean Affairs   12 March 2012

Indonesia Bans Foreigners from CEO positions at local firms

JAKARTA, March 12, 2012
Indonesia has banned foreigners from holding the post of chief executive officer (CEO) and human resources (HR)-related positions at local firms, effective February 29.

The English daily, The Jakarta Post, reported that under a Manpower And Transmigration Ministry regulation, foreigners were banned from holding 19 different positions in local firms.

The regulation however did not specify which companies would be affected, the daily said in a front page report Monday.

A ministry official, however said the rule would be limited to wholly owned local companies and would not apply to foreign-owned companies.

"The policy is not retroactive, so it is probable that no firms would be affected by it," Titin Supenti, head of the foreign workers division at the Manpower and Transmigration Ministry, told the Post.

The position of CEO is different from that of president director, Titin said, brushing off concerns that the new regulation would force massive corporate reorganisations.

Manpower and Transmigration Minister Muhaimin Iskandar said that the spirit of the regulation was to give more chances to develop local human resources, especially in mid-level positions.

"We need to back up and push several important positions to be filled by Indonesians. If all mid-level positions are filled by foreigners, there will be envy, which in turn could create danger for companies," Muhaimin said.

Some business players have criticised the regulation, calling it unnecessary since, by nature, local businesses prioritise local workers, including at the management level, as it was more cost efficient.

"Companies spend much to employ foreign workers and thus will not make that an option unless there is a necessity," Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo) was quoted as saying.

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