Indonesia must find ways to attract and retain domestic and foreign talent, a BCG report finds. (Antara Photo/Rahmad Gunawan)

Jakarta. Indonesia will withdraw a plan that would force foreign workers to take local language proficiency exams after protests from investors, two government officials said.

Manpower Minister Muhammad Hanif Dhakiri earlier this month told reporters the government would require existing and prospective foreigners to pass Indonesian language tests to work in the country, a move seen by many foreign investors as protectionist.

Currently, foreigners do not have to speak Indonesian to receive a work permit for Southeast Asia’s largest economy.

“Coordinating ministers agreed last week that the planned regulation should be dropped. The details are now being worked out within the cabinet,” said a government official, with knowledge of the matter, who declined to be named because he was not authorized to speak to the media.

A second government official confirmed that the plan for language tests would be withdrawn after “many people complained, including domestic investors who said they needed foreign expertise.”

Minister Dhakiri on Friday denied that the language test requirements would be cancelled. The minister was not immediately available for comment on Tuesday.

Companies have increasingly raised concerns about the growing difficulties of obtaining work permits for foreign workers, with language exams being the latest example.

“If they do withdraw this, we are encouraged by that. It is an unnecessary barrier,” said Lin Neumann, managing director of the American Chamber of Commerce Indonesia.

Vice President Jusuf Kalla told Reuters last week that the planned regulation was “well intentioned” to protect low-skilled jobs ahead of the ASEAN Economic Community (AEC) integration this year, but should be reviewed because of its potential impact on investment.

President Joko Widodo, who took office in October, wants to spur economic growth from an estimated 5.1 percent in 2014 to 5.8 percent this year, relying mainly on higher investment.

Reuters