Developing Indonesia’s ICT industry: facilitating the return of Indonesia’s ICT professional from the US

ict2By: Edi Suharto, Raden Sigit Witjaksono, Chery Sidharta, Budhi Prihantoro, Edy Wardoyo

Problem identification

Skilled labor is a segment of the work force with a high skill level that creates significant economic value through the work performed as part of human capital. Skilled labor is generally characterized by high education or expertise levels and high wages.

Indonesian ICT professionals have been looking at the United States as a potential destination for migration, because of its relative developed ICT industry and high wage. On the other hand, Indonesia can engage the United States to encourage the return of Indonesian ICT professionals, in line with the government’s policy to develop Indonesia’s ICT industry. The second question is what Indonesia could do to develop its skilled labor, through cooperation with the United States.

Developing trends of skilled ICT professional in Indonesia and United States

Since the dot-com bust at the beginning of the millennium, the demand for technology jobs in the U.S. has steadily increased. There are now more IT jobs in the United States than there were at the height of the dot-com boom. With an estimated 800,000 jobs in the US, the future is bright for ICT professionals in US.

By 2020, U.S. Bureau of Labor Statistics (BLS) biennial update of employment makes projections that employment in all computer occupations is expected to increase by 22%, but some IT fields will fare better than others. The U.S. tech industry added 129,600 net jobs between 2013 and 2014, for a total of nearly 6.5 million jobs in the U.S., according to Cyberstates 2015: The Definitive State-by-State Analysis of the U.S. Tech Industry.

ICT sector is also a growing sector in Indonesia. In 2014, e-commerce transactions in Indonesia were estimated at $12 billion, which was forecast to rise to $25 billion in 2016. The government, with plans to open the sector even wider to foreign investors, Indonesian government had outlined a strategy to hit its target of developing e-commerce into a $130 billion industry by 2020, with a focus on seven key areas, namely funding, taxation, consumer protection, cyber security, communication infrastructure, logistics, and education and human resources, including recruitment.

The rapid expansion of the tech industry in Indonesia has propelled the demand for ICT professionals. However, the availability for manpower for these newish jobs is limited. During a visit to the Silicon Valley, Mr Rudiantara, the Indonesian Minister for Communication and Information Technology said he encouraged young Indonesian ICT professionals to return home and help develop the E-commerce industry. “If you possess an entrepreneurial spirit, this will be the right time for you to return to Indonesia as the more problems we have, the more opportunities we have as well,” he said.[i]

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Group 2 met ICT expert from Binus

Policy options for developing ICT skilled labor in Indonesia

Option 1:

Indonesian professionals actually consider the offer to return home. According to the study by specialist professional recruitment firm Robert Walters showed that 85 percent of over 400,000 Indonesian professionals working overseas want to come home.[ii] Their consideration in deciding to return home is mainly salary. Indeed this depends on the ability of the companies to hire these professionals.

The study found that 35 percent of its respondents expect an incremental salary increase of 20 percent, a challenge for employers in Indonesia as the lower cost of living is often reflected in bigger budget constraints.

The government help returning Asians by offering tax break to the employer and individuals. to assist adjustment and adaptation of the returning professionals. However, this policy requires a change of Indonesian tax policy and will not be attractive for the professionals and employers in the long term.

Option 2:

A state’s role in transforming migration processes is undoubtedly crucial, as the very idea of international migration presumes the existence of nation-states with territorial and institutional borders, inherently affecting migration tendencies and patterns, through the specific immigration policies, defined as ‘laws, rules, measures, and practices implemented by national states with the stated objective to influence the volume, origin and internal composition of migration flows’

The support for this specific immigration policy is the commitment of the government to develop the ICT industry. This option can be implemented through easier immigration policies for Indonesian diaspora, such as simplify the procedure for ICT professionals to get permanent and bilateral agreement with the United States. On the other hand, this exclusionist and/or restrictive policies towards other type workers are taken as hostility by the Indonesian government towards them.

Policy Recommendations

Taking into consideration the length of time to implement the options, and possible political barriers to legislation adaptations, it is recommended that Indonesia take the second option. At the same time, Indonesia has interests to keep U.S. open for skilled ICT professionals from Indonesia. In this regard, the immigration policy could be supplemented with the following measures:

  1. Develop cyclical movement of human resources between Indonesia and the United States, through bilateral agreement on cooperation in ICT industry human resources. Similar cooperation could also be initiated with U.S. universities. This is to ensure, Indonesian professionals are able improve their competencies and open the ICT industry labor markets for Indonesian citizens in the U. S. The agreement also facilitates ease of professionals to return to Indonesia.
  2. Encourage Indonesian diaspora in the U.S. including Marvel Technology Group to invest in Indonesia to collaborate in developing Indonesia’s ICT industry with the hope that this new investment will attract more ICT professionals to return to Indonesia.

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[i] “Young Indonesian IT Professionals Urged to Return Home to Build E-Commerce Industry.” Monroe Consulting Group. https://www.monroeconsulting.com/indonesia/company-news/monroe-indonesia-news/young-indonesian-it-professionals-urged-to-return-home-to-build-e-commerce-industry.

[ii]Ratri M. Siniwi. Most Indonesians Working Overseas Want to Come Home, for the Right Price”. Jakarta Globe, 02 September 2016

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