Projecting Indonesia’s New Direction in Immigration Policy

Indonesia, home to more than 270 million people, recently held its fifth general election on 14 February 2024 (with the official results expected before 1 April). Prabowo Subianto, Indonesia’s current Minister of Defense, who twice contested in presidential elections throughout the last 10 years, has emerged as the apparent winner with approximately 58% of the vote.

With the world’s fourth-largest population and the third-largest democracy, Indonesia’s presidential election marks the country’s continuous effort to maintain democratic governance.

As a member of the G20 and home to the largest Muslim-majority population, Indonesia’s electoral process is keenly observed both domestically and internationally. Given the country’s influence in Southeast Asia (as the largest economy in the region), this year’s election outcome has the potential to shift the trajectory of Indonesia’s economic growth and diplomatic relations.

While speculative, the election outcome may also significantly influence the country's immigration policy. Depending on the stance of Prabowo’s backing party or coalition, Indonesia may see reforms aimed at either tightening or relaxing its immigration rules.

The direction in which the new administration will take immigration policy is of paramount interest to foreign nationals, businesses and global investors.

Prabowo’s Administration – Values, Policies and Jokowi’s Legacy

For the past decade, under current President Joko Widodo’s (Jokowi) leadership, Indonesia has seen many developments in the country’s domestic and foreign policies, including significant advances in the immigration landscape.

For example, the Second Home Visa was introduced, a visa that encourages foreign investors to reside in Indonesia for a longer term while simultaneously contributing to the domestic economy. We have also seen the unveiling of the Golden Visa to entice foreign individuals (by offering extended residency) and corporations to invest in Indonesia.

The introduction of more visa categories in early 2024 is one to note, as it offers more cohesive classifications that give businesses and individuals additional clarity and transparency. For example, following the introduction of new business visa classifications and other visa sub-types, there is a clear expansion of options offered for foreign nationals to invest and contribute to Indonesia’s economy on a long-term basis.

During his time in office, Jokowi demonstrated a commitment to encourage Indonesia’s foreign investors to remain and invest in Indonesia for the long term, especially with the digitisation of the work permit and visa processes. Compared to half a decade ago, through the improvement of workflow and efficiency, the government has streamlined the work permit regime for foreign nationals, contributing to a more enticing environment for foreign investors to conduct business in Indonesia.

In Prabowo’s campaign, he mentioned his commitment to continuing Jokowi’s policies, but questions remain – how long will his alliance with Jokowi continue? How does Prabowo intend to approach and implement his campaign promises? Will he adopt a more protectionist or multilateral approach? Will he continue to welcome foreign talent or protect the local workforce? 

The selection of his cabinet of ministers in October 2024 will provide us with more colour on the climate to come. Choosing to retain or replace the Minister of Manpower and Directorate General of Immigration under the Ministry of Law and Human Rights will be key clues in determining how Prabowo is likely to strike the balance in continuing Jokowi’s legacy on streamlining the work permit regime and upholding his nationalist tendencies.

Focus on Indonesia’s Growth

Indonesia’s growth and development have been focused on its infrastructure and this can be seen through the various ambitious construction projects across the country, including toll roads that connect Sumatra and Java, the revitalization of seaports and airports, new industrial zones, the development of public transportation systems (including the first high-speed rail in Southeast Asia), and, most significantly, Jokowi’s mega project to shift the capital of Indonesia from Jakarta to Nusantara in Kalimantan.

These projects are considered long-term and under the Proyek Strategis Nasional (National Strategic Projects), which are projects that are intended to boost Indonesia’s GDP and welfare and push the country forward as a global economic powerhouse.

Prabowo’s campaign was based on “Developing Indonesia,” promising to achieve a target of 7% economic growth. Based on this, a dynamic and pro-business administration is expected, which would likely implement policies encouraging foreign investment in Indonesia.

To entice foreign investors, regulations and procedures that simplify business operations and license approval processes have already been evidenced, enhancing Indonesia's economic competitiveness, including in the immigration sphere.

The recent digitisation of work permit documents and accessibility to online immigration websites has streamlined the overall work permit process. Maintaining stability through a smooth transfer of presidential power sends positive signals to investors and businesses, demonstrating that it is in Prabowo’s interests to maintain the status quo through consistency with immigration rules and regulations. 

Regulatory Framework and Global Competition

Despite the expectation for continued streamlining, Indonesia is still likely to maintain policies that mandate training or knowledge transfer programs for local staff, aiming to improve local skills and reduce dependency on foreign labour over time. The government may also push local companies to promote innovation, potentially leading to job creation in the longer term.

Many acknowledged that the increased opportunities and sectoral growth may push the government to simplify the regulations, which in turn, may lead to an increase in foreign talent and entrepreneurs. This may boost job creation, technology transfer and targeted policies that can spur growth in strategic sectors by attracting investments that require specialized skills not readily available in the local labour market.

As the country competes with other emerging markets for foreign investment, Indonesia’s focus on maintaining a more streamlined work permit system is crucial in maintaining its competitive edge in ensuring that the country can attract and retain global talent.

Once his victory is officially endorsed, Prabowo will begin to lead Southeast Asia’s largest democracy on 20 October 2024. While several questions can only be answered once the Cabinet of Ministers is selected in October, a continued focus on welcoming foreign investment through streamlined immigration practices is expected, allowing Indonesia to continue to occupy a significant place on the global political stage.

Need to Know More?

For further information on Indonesia’s immigration policies, please contact Senior Business Immigration Manager Alfred Chong at [email protected], Senior Business Immigration Consultant Raga Rasuanta at [email protected] and Business Immigration Consultant Sofea Aiman at [email protected].

This blog was published on 18 March 2024, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please subscribe to our alerts and follow us on LinkedIn, X, Facebook and Instagram.