Indonesia Drops Visa Rules For Foreign Workers in Latest U-Turn

  • No longer need to have 10 locals per foreigner in companies
  • Government says original rules did not support investment

Indonesia has dropped rules imposed earlier this year that added visa paperwork and restrictions for foreign workers in the country, after complaints by companies.

The measures scrapped include a need for visas for foreigners attending work meetings in Indonesia, permits for non-resident company directors, and a requirement to have 10 local workers for every non-Indonesian, Hery Sudarmanto, an official at the manpower ministry, said on Wednesday. The government felt the original rules, imposed in July, didn’t support investment, he said.

“This was making investors think that Indonesia was a lot of hassle,” Sudarmanto said.

The rules were undermining appeals by President Joko Widodo for foreign direct investment to help lift an economy growing at the slowest pace since 2009. The president has introduced a series of measures in recent weeks to try to cut red tape, after a first year in power filled with policy u-turns and mixed messages for investors.

In this case, reversing its decision on a poor rule after lobbying from companies showed the government is willing to listen and is responsive, said John Kurtz, president director of the Indonesian operations of consulting company A.T. Kearney.

“They have basically wiped out all the negative aspects of the prior regulation
and they have done it pretty quickly - you don’t see that that often,” Kurtz said. “What’s disturbing is the lack of coordination in the first place. It never should have happened if you want foreign investment.”

The manpower ministry earlier this month had suggested a workaround for the rules requiring 10 local workers per foreigner: stock up on drivers and “office boys” to make tea.

Before it's here, it's on the Bloomberg Terminal.