Newsletter September 2014

Selamat Siang!
(that’s Good Afternoon in Bahasa Indonesia)

I have recently spent some time in Jakarta, soaking in the business/political atmosphere as well as contemplating on a country possibly on the brink of change. The hotly contested General elections and the controversial Presidential elections have just passed. The people have voted for change, transparency and proactivity in the person of Joko Widodo (“Jokowi). As to why its different this time… read on below.

On the other side of the ocean, changes are also taking place in the immigration scene in Australia. We made some mention of it in the last mailshot, which we are following up on here.

Finally, I would like to say “Terima Kasih” to all our customers, contractors, business partners and staff for another record year thus far. It is the Indonesian term for “Thank You”. Incidently, it directly translates into English as “Receive Love”. Hence, each time we say thank you, we are giving love and the recipient is receiving love… beautiful, isn’t it…

Take care,
Harry… on behalf of The Innovare Team 

Indonesia: Times… they are a Changing

Indonesia recently celebrated Independence day, when they broke off from the Dutch in 17 August 1945. Since then, the country has gone though a roller coaster ride from the authoritarian rule of Suharto to successive governance that have opened the doors to corruption, especially in the justice and civil service sectors. The red tape and widespread extortion in the process of obtaining licences, permits as well as the demand for facilitation fees have reportedly lost Indonesia US$238m in 2011##

Jokowi is a classic rags to riches story. Having lived in run down shacks in Solo, he gradually rose through the ranks of business and eventually, as Mayor of Solo, then Jakarta and now, President of Indonesia. Forward and down to earth, he is often seen walking the ground, fixing the problems of the everyday citizen and cutting off red tape to enhance, particularly, infrastructure problems. He and his team have and will hit the ground running.

Already, there have been widespread arrests of politicians caught red handed since 2013 (literally, with cash stashed away)… Rubiandini (Chief energy/oil & gas regulator), Akil Mochtar (Chief Justice)… just to name a few. More to come under Jokowi.

How will this affect the contractor management industry?

Licencing/Contracts: For a start, there was an immediate contraction of oil and gas licences and outsourcing contracts since Rubiandini’s arrest. Outsourcing contracts took a momentary freeze (as most corruption cases were achieved via outsourcing).

Work Permits: Immigration quotas are more strictly monitored and given out in small tranches. Innovare currently operates 2 companies in Indonesia to enable a steady stream of quotas to meet our customers’ demands. Even then, the positions are like gold-dust and gets snapped up the moment it becomes available.

Taxation: This will most likely be the soon to be targeted area as the government will seek to enforce procedures to prevent tax leakages. For example, citizens now need a Tax ID Card before they can borrow, invest or effect financial transactions.

In the short term, expect the tussle between the old and new way to lead to “fuses to blow up” and processes to be stifled… as we have already seen. However, we think it is better in the long run for a “cleaner” Indonesia... the people deserve and want it.

Ref: ##Jakarta Globe (30 Jan 2012)

Australia: Embracing Foreign Talent?

Last year a number of changes were introduced to the Temporary Work (Skilled) Visa Subclass 457, Australia’s long-term skilled work visa.

The changes included:

  • Tougher penalties for employers who breached their sponsorship obligations;
  • Labour market testing;
  • Increased compliance for training of Australian staff;
  • Increased English language testing; and
  • Higher visa application fees.

Many of these changes were introduced by the previous government and arose in the lead-up to the Federal election in a climate where both major political parties sought to be seen as taking a hard-line stance on immigration.

However, the changes that were introduced on the platform of ensuring the integrity of the program look to be having an adverse effect on the flow of skilled workers required to fill skilled positions in Australia.

Recent statistics released by the Department of Immigration and Border Protection (DIBP) indicate that the number of 457 primary visa applications granted from the beginning of the program year (July 2013) until 31 December 2013 was 23.9% lower when compared with the same period in the previous program year. Applications in the same period fell 37.9%.

It is interesting to note that despite the decline in applications, the number of primary visa holders in Australia on 31 December 2013 increased by 8.3% compared with the same date in the previous year, suggesting that these skilled workers remain in Australia for a considerable period. In fact we know that the majority of these skilled workers will apply for permanent residency and provide a good source of migrants for Australia’s Skilled Migration Program.

If the numbers continue to fall the pressure will increase on the Immigration Minister, Scott Morrison, to repeal some of the red-tape that is making the system unworkable for many Australian businesses.

With many sectors continuing to experience shortages for key skills there is hope that the minister will introduce reforms that maintain the integrity of the program while allowing business to access a global talent pool without being burdened by an onerous application process. However, with the recent reports on the abusive uses of the 457 program to sponsor illegal immigrants and even terrorists/organized crime (uncovered by a Fairfax Media investigation), the loosening is not a unilateral one. One can be certain it will be selective, leaning on relevant industries as well as players with an established track record.

Having been frozen out by the immigration tightening for several years, we are pleased to update that we have already started offering a sponsored (employer of record) solution in Australia since late 2013. 


Should you need assistance in Indonesia or Asia Pacific, we would be pleased to hear from you. Please contact :
Tel : +65 6336 7966

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