Indonesia aims to plug skills shortage in booming tech sector

By Stanley Widianto

JAKARTA (Reuters) - An Indonesian government plan to allow start-ups to hire foreign staff more easily could help plug a shortage of skills in the country's booming sector, said a tech entrepreneur, though the idea is likely to face resistance from unions.

The proposal, contained in a new "Job Creation" bill submitted to parliament this week, stipulates that foreign staff at start-ups can work in certain posts without a permit "for a certain amount of time".

Tommy Yuwono, co-founder and president director of fintech company Pintek, which offers loans for school tuition, said there was a crucial need for more tech engineers.

"The bill is positive for knowledge transfers especially in tech because there are shortages," he told Reuters. "There needs to be incentives for schools, vocational schools on how to produce quality Indonesian engineers."

President Joko Widodo has pledged to focus on improving human capital in his second five-year term in office.

While Indonesia's Internet economy is forecast to grow to more than $100 billion by 2025, it produces only 278 engineers per million people a year, according to consultancy A.T. Kearney.

Indonesia has five "unicorns" - or start-ups worth at least $1 billion - but firms say they often struggle to recruit suitable engineers and executives.

One local success story, the $10 billion ride-hailing and payments company Gojek, now maintains a large engineering and development office in the Indian tech hub of Bangalore, as does online travel app Traveloka, which is valued at over $4 billion.

Other unicorns, including e-commerce marketplace Tokopedia, will hold recruitment events abroad to recruit top Indonesian talent. Firms say that due to demand, experienced Indonesian tech executives or engineers can be paid more working for unicorns at home than in Silicon Valley.

The "Job Creation" bill is one of Widodo's so-called "omnibus laws", which aim to change scores of existing laws to cut red tape and attract investment in Southeast Asia's biggest economy.

Kahar S. Cahyono, a spokesman at the Confederation of Indonesian Workers' Union (KSPI), said the definition of start-ups in the bill was too broad and risked of misinterpretation.

"It will be hard to prove that foreign workers will work at start-ups or not," he said, accusing the government of favouring foreign workers.

Aris Wahyudi, an official at the manpower ministry, said the use of foreign workers was part of a strategy to bring in global talent to speed up the development of Indonesian workers.

Indonesia ranks 73 out of 190 countries in the World Bank's ease of doing business index, below neighbours such as Singapore, Malaysia, Thailand and Vietnam.

(Additional reporting by Tabita Diela and Fanny Potkin; Editing by Ed Davies and Alex Richardson)