Update: Just received a client alert from the guys at Hadiputranto, Hadinoto and Partners about the Manpower Decree. They too point out the confusion of what kepala eksekutif cantor actually means. They have a useful downloadable pdf of the client alert here.
Their suggested action is also worth noting
- Foreigners in Indonesia should always only use the title on their work permit documentation. This includes reference to their title in all agreements, on business cards, on email sign offs etc. To use a title that is different to the approved title is in violation of the permit. We are aware of case where disgruntled employees have used such a violation as a basis to report a foreigner to relevant Indonesian authorities e.g. by providing a copy of a business card or an email to authorities.
Typically foreigners in Indonesia that are regarded as “Chief Executive Officers” formally hold the position of President Director or Director. With regard to the comment above about foreigners only using the title on a work permit, and now Decree 40, there is even more reason why foreigners in Indonesia that are regarded as “Chief Executive Officers” should only used the title on their work permit and not also make reference to the title “Chief Executive Officer”
What is a kepala eksekutif kantor (literally head+executive+office)? The uninitiated may jump top the literal translation of Chief Executive Officer, but the MInistry of Manpower and Transmigration begs to differ.
The Ministry, which recently issued regulations banning foreigners from holding 19 kinds of jobs in Indonesian-owned companies, says that A CEO is actually a President Director, except that a President Director is not a Chief Executive of the Office, which actually a position that one normally calls an Office Manager – you know the glorified euphemism to the executive whom you do not know what else to do with.
With that cleared up the MInistry is expected to try to enforce its regulations that have befuddled the investment and business community alike.
Makes you wonder:
- Does the Ministry have so much time on its hands that this take precedence over issues like revamping labor laws?
- Would Indonesian-owned companies be discriminated against getting the top possible talents if this law goes into effect (in which this becomes a case of jobs nationalism boomeranging on the people it is supposed to help and protect)?
The government came under fire over the weekend after it released a ruling banning foreigners from occupying 19 types of positions in Indonesian-owned companies.
The ruling from the Ministry of Manpower and Transmigration, dated Feb. 29, was released on Saturday. It was attacked for apparent ambiguities and listing positions including chief executive officer as being off-limits.
But Manpower and Transmigration Minister Muhaimin Iskandar said the position, listed in Indonesian as kepala eksekutif kantor (executive head of office), had been mistranslated as chief executive officer.
“CEO is not like the president director. With CEO, I mean the head of the administration and personnel, or HRD. Once again, it is not the president director, it is only the chief officer for human resources,” Muhaimin said.
According to the regulations, positions that are off-limits to foreigners are, among others: personnel director, industrial relation manager, human resource manager, personnel development supervisor, personnel recruitment supervisor, personnel placement supervisor, employee career development supervisor and personnel administrator.
Listed as number nine is “chief executive officer.”
Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo), and James Filgo, a senior member of the American Chamber of Commerce in Indonesia, reacted by accusing the government of trying “to micromanage” the private sector.
Sofjan raised the concern that the new regulation would hamper foreign investment. Rather than try to micromanage the private sector, Sofjan said, the government should work to make the bureaucracy more effective and efficient.
“Why should they invest if they cannot put their men in the company,” Sofjan asked.
Filgo also said the government appeared to be in the business of managing private industry, and called on the latter “to address issues such as this very quickly with the government before it destroys efforts to achieve global competitiveness for Indonesia.”
Chris Wren, executive director of BritCham, said the new regulations gave “cause for concern, and we are seeking further clarifications.” Reyna Usman, director general of labor placement and development at the ministry, specified that the regulation was not retroactive.