The Government of Indonesia is now focusing on the development of Indonesian human resources. The government, thus, continue to promote greater involvement of industries in the quality apprenticeship programme through its new tax incentive mechanism, as stated by Rudy Salahuddin, Deputy for Coordination of Creative Economy, Entrepreneurship and Competitiveness of Cooperation and SMEs of the Coordinating Ministry for Economic Affairs when opening a one-day seminar in Jakarta on 22 October.

“The last five years, the government has focused on the infrastructure development and it is now the time for human resource development to ensure the relevance of competency and skills of Indonesian labour force to the needs of the industries and to the fast changing world of work,” said the Deputy Rudy. He added the tax deduction was expected to boost the interests of industries in taking part in the national apprenticeship movement.

Titled “Quality Apprenticeship Programme with Sector Associations, the Seminar received unexpected enthusiastic responses from more than 150 participants, representing business associations, enterprises and other various organizations including trade unions. The Seminar involved and focused on five prioritized industrial sectors: tourism and hospitality, manufacture, agribusiness, healthcare and digital economy.

Kazutoshi Chatani, the ILO’s Employment Specialist, emphasized the importance of internal commitment from the participants to realize the industrial engagement in skills improvement based on the needs of industries. Meanwhile Rafael Teck, Counsellor Development Cooperation of the Embassy of the Federal Republic of Germany highlighted the importance of labour market relevance to the Technical and Vocational Education and Training (TVET), particularly through the tax deduction programme.

In the discussion session, Syarif Ibrahim, Head of the State Revenue Department of the Finance Ministry’s Fiscal Policy Agency, explained that the Ministry of Finance is in the process of writing up regulations for the implementation of the industrial tax incentive. The tax incentive, also referred as a super tax deduction, is stipulated in Government Regulation (PP) No. 45/2019 on the calculation of taxable income and income tax payments in the current year.

Under Article 29A of the regulation, companies that provide training programmes, internships, apprenticeships and/or educational activities to develop human resources in certain competencies can cut their taxable gross income up to 200 percent of the funds they spend on the activities.

“However, we have to be careful to avoid a moral hazard,” he said, adding that these implementation regulations were now being carefully formulated to ensure no loopholes that could be used by companies to avoid paying taxes.

Sumarni, Deputy of Human Resources Department of the Indonesian Retail Company Association (Aprindo), said that skills development and vocational programmes were part of the prioritized programmes of the Association. “We have formulated the National Working Competency Standard (SKKNI) for modern retail for two years and the standard has been enacted through the Manpower Ministerial Decree No. 16/2018, covering 83 types of competencies,” she explained.

The competency in modern retail has now been integrated into the curricula of the vocational schools. To support the national apprenticeship programme, Aprindo has established training centres and a certification institution for retail professions. “We do not only reach out to vocational students, but also their teachers so that they know what kinds of tasks that should be done by the students when entering the real world of work,” she added.

From the perspective of the industry, Joko Baroto, Human Resources Division of PT Astra Daihatsu Motor, stated that one of the challenges faced by the industry in apprenticeship was the implementation of the on-job-training. “We need to ensure the availability of proper training equipment that some our supply chains do not have. Thus, similar with Aprindo, we have trained teachers of vocational schools to smooth the transfer of knowledge regarding the real industrial culture to the students,” he added.

Commenting on the roles of the industries in apprenticeship programme, Kazutoshi underscored the significant involvement of sectoral business associations as they really know skills and competency needed by each business sector. “The sectoral business associations like Aprindo are the one who really understands the specific skills and competency needed in the retail business, for example. It is important that they really involve in conducting the apprenticeship programme,” he concluded.

Therefore, to better understand the needs of the prioritized industrial sectors and to obtain concrete inputs as well as insights, the seminar was immediately followed with panels of focused group discussions involving these sectors. For two days from 22-23 November, representatives of these sectors sat down together identifying their industrial needs in terms of skills and competencies and their capacities in conducting apprenticeship programme.