Indonesia has issued a decree banning foreign chief executives from running wholly owned local companies but said the regulation would not apply to companies with foreign investors, a senior Labour Ministry official told Reuters on Saturday. The regulation, which came into effect on February 29 according to the ministry's website, drew criticism from the Indonesian Employers Association which described it as protectionist and unnecessary.
Southeast Asia's top economy regained investment status recently and there have been several cases of labour unrest, as workers try to gain a greater share of the rewards in a booming economy, and of government regulations that could unnerve foreign investors.
The regulation is limited in scope and the government is working with companies to make sure it is properly understood, said the Labour Ministry official. "It only applies to wholly owned Indonesian companies because a CEO position handles human resources in the companies. However, for companies that have foreign stakeholders it's not a problem," Titin Supenti, head of the foreign workers division in the Labour Ministry, told Reuters.
It was unclear which companies would be affected by the regulation but it appeared that the big mining firm, US-listed Freeport McMoRan Copper & Gold Inc, would be exempt from the regulation. Freeport is renegotiating its contract to run Grasberg, a mining complex on the eastern Indonesian island of Papua that has the world's largest gold reserves and the second biggest copper mine. "There's a lack of skilled workers in our country amid the globalisation era and the regulation shows a narrow-minded nationalist move," Sofyan Wanandi, chairman of the Indonesian Employers Association (APINDO), told Reuters.
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