Publications

The oil and gas industry has held an important role in the Indonesian economy for many years, and is likely to keep its importance during the foreseeable future. Because of the nature of oil and gas operations, which requires highly skilled manpower, and the scarcity of local expertise, the industry has been dependent on foreign expertise since the early years of oil and gas exploitation in Indonesia. However, over time the local nationals become increasingly experienced and knowledgeable on the oil and gas technology. It is, therefore, in the interest of the nation to become less dependent on the foreign work force. In order to gradually replace foreign manpower with local work force, the government has instituted the Indonesianization program. Because of the cheaper local labor, the program offers incentives to foreign companies operating in Indonesia. It is based on this mutual benefit that the program has received an increasing emphasis in recent years. The implementation of the Indonesianization program is not without constraints and problems arising from various reasons. However, the most important source of the problems centers around cultural factors. Cultural differences have caused differing expectations which impinge upon the attainment of optimum performance - a necessary requirement for the success of the program. This paper will discuss several factors that need to be considered by all parties involved in order to effectively implement the program. These factors include the concept of psychological contract, career planning and development, technology transfer, and cultural differences. While the paper is not intended to provide a detailed prescription for the implementation of the program, it offers some insights which may be of value to the. PSCs.