How Indonesia accredits employment agencies in Hong Kong

PUBLIC-PRIVATE PARTNERSHIPS IN THE ADMINISTRATION AND CONTROL OF INDONESIAN TEMPORARY MIGRANT LABOUR IN HONG KONG

Public-private partnerships between the Indonesian government and migrant labour employment companies in Hong Kong are one example of a wide range of governance arrangements that have emerged as ‘institutional fixes’ (c.f. Rodriguez, 2010: xxii) to resolve the impasse between states over the responsibility and right to intervene in matters involving migrant workers. With the permission of their host, foreign states can set up an extraterritorial representative to perform a limited set of functions such as extending the validity of passports for their citizens. Indonesia has moved beyond these conventional consular tasks by claiming a formal right to intervene in labour migration matters through partnerships with local employment companies, including those in Hong Kong. By way of these arrangements, Indonesia has effectively extended its regulatory function into the territory of another state, thus calling attention to the blurred boundaries that divide the state and market in the exploitation and control of international migrant labour.

The roles played by embassies in the administration of Indonesia’s international migration programme feature little in the literature on Indonesian migrant labour. Only in the context of Hong Kong have scholars included the Indonesian consulate in their analysis (Sim, 2008; Sim & Wee, 2009). Limited attention to the relationships that exist between Indonesian institutions and employment companies in this and other locations is symptomatic of a broader tendency in the study of Indonesian labour migration in a way that excludes detailed accounts of state involvement (but see Ford & Lyons, 2011; Killias, 2010; Palmer, 2012; Silvey, 2004, 2007). By contrast, the literature on international labour migration from the Philippines analyses state activity at home (Guevarra, 2010), but also extraterritorially (Lindio-MacGovern, 2003: 254 on interventions in Italy; Rodriguez, 2010: 127 in Brunei). In part, Indonesian labour migration researchers do so because the approach helps to avoid the trappings of structuralism, which can overemphasize state power and state-market distinctions. From the perspective of Indonesian migrant workers, however, analysis of their country’s interventions overseas is vital, as evidenced by the fact that it is common to see Indonesians demonstrate outside their Consulate (Constable, 2007: 161-163; 2009, 2010), where they protest against the collusive relationship between consular officers and Hong Kong employment companies.

This article analyses Indonesia’s public-private partnerships with migrant labour recruiters in Hong Kong. Motivation for the study stems from the experience that the Indonesian consulate was a more effective means through which to compel employment companies to release Indonesian migrants’ passports than the Hong Kong police. To learn more about why, more than 150 respondents were interviewed between 2007 and 2010 using a ‘multi-sited fieldwork approach’ (Marcus, 1995: 1) that focused on Hong Kong, Indonesia, Malaysia and Singapore. In each location, Indonesian officials were selected based on authority and experience to get a sense for what Indonesia’s relationships with overseas recruiters enable on the ground. Prominent employment company owners in all four countries revealed more about sites of harmony and tension in the system. In addition, in Hong Kong, three major migrant worker groups helped make contact with a wide range of Indonesian migrant workers, whose accounts of their experience of the system were used to build up a picture of the migrants’ perspective in that particular location. This methodology helped to understand arrangements as they existed until at least 2010 when the Indonesian Consul-General departed from Hong Kong. Heads of Indonesia’s consular offices exercise wide discretion in deciding the character of systems under their management so they are expected to change accordingly (Palmer, 2012: 161).

The analysis that follows is divided into four parts. The first section contextualizes Indonesia’s public policy choice to cooperate with employment companies in Hong Kong through a discussion of public-private partnerships, the blurry boundaries that characterize them, and their role in world politics. The second maps out Indonesia’s motivations for bringing overseas recruiters into the state migration programme. A case study then reveals how Indonesia partners with overseas employment companies, with a particular focus on the ways in which the Consulate uses the relationships to extend its regulatory function into Hong Kong territory. The final section explores the limits of partnership using examples of Indonesian interventions. The paper demonstrates that these partnerships are an effective means through which to exercise power extraterritorially, but that they are not the best public policy solution for all stakeholders, especially migrant workers. The conclusion problematizes the idea of responsibility for migrants and argues that this kind of public-private partnership deserves further attention in the literature on world politics.

PUBLIC-PRIVATE PARTNERSHIPS, BLURRY BOUNDARIES, AND WORLD POLITICS

Public-Private Partnerships (PPPs) have been a popular topic in privatization debates since the arrangements started to proliferate in the 1980s. For critics, the motivation and outcomes of PPPs are a particularly popular focus of scrutiny, as they often prioritize the immediate interests of state-based actors and private individuals over the public interest. But since the beginning of the 1970s, PPPs have also received critical attention by those who observe world politics (Keohane & Nye, 1971). Transnational PPPs involve interactions across national boundaries, with studies showing that these arrangements enable entities in one state to intervene in the territory of another by interacting with public actors there (Risse-Kappen, 1995). This focus on interaction with states on their own turf only partly reveals the diversity of activity that constitutes transnational relations. Missing from the picture is an account of transnational PPPs in an extraterritorial setting.

PPPs are a ‘rubric for describing cooperative ventures between the state and private business’ (Linder, 1999: 35). States often choose to participate in PPPs because the market can provide services more effectively (Boycko, Shleifer et al., 1996: 309). Furthermore, PPPs may be the only feasible means through which to achieve a particular end, such as the development of substantial new infrastructure (Jamali, 2004). But PPPs are not always the cheapest approach for doing so. PPPs can wind up being more expensive than if existing state institutions had been used (Heller, 2001: 146). Moreover, studies show that over the long term PPPs may in fact be a means of ‘transferring investment risk from the private sector to the public sector’ (Bloomfield, 2006: 402), which raises questions about the claim that PPPs are somehow organized ‘around a mutual benefit’ (Pongsiri, 2002: 487). Other critical perspectives offer an answer to these questions, describing PPPs as a mechanism that enables private actors to make a business out of responsibilities that the state offloads. This mutual benefit partly explains why state-market relationships in PPPs tend to be less competitive than in other areas of activity (Linder, 1999: 36).

The commercial orientation of PPPs can result in outcomes that do not reflect the interests of consumers or, as some argue, even the government itself (Pring, 1987: 292). In extreme cases, partnerships can lead to situations in which private actors come to exercise ‘broad discretion over government programs’ (Metzger, 2003: 1501). Their dominant role in partnerships has a lot to do with the dynamics of state-society relations. Simply put, weak states in strong societies are less able to resist pressure from private actors to behave in a particular way (Migdal, 1988). In an example, studies of big business and the state in former Soviet countries show that private actors were able to harness the state’s institutional and legal infrastructure through ‘state capture’, an outcome that enables the generation of greater profits (Heller, 2001: 146). These understandings of state-market relations assume that public and private institutions are somehow engaged in a negative power relationship to one another (Ong, 2006: 3). In fact, however, the relationship is often defined by interactions that are more top-down than bottom-up. To illustrate, Fyre (2002) argues that both sets of actors may engage in an ‘elite exchange’ to work out which mutual favours are required for implementing rules (see also Darden, 2008).

PPPs partly formalize blurry boundaries between public and private actors, clarifying some roles but blurring others in areas such as policy-making and regulation. Understood to be ‘based on rules which may give strict directives, or be broadly enabling in ways which permit further negotiation’, regulation may straddle institutions inside and outside government (Minogue, 2002: 650 (emphasis in the original), 657). This kind of governance approach is ‘typical of the cooperative state’, which tends to work through ‘mixed public-private policy networks’ as part of its regulatory function (Mayntz, 2002: 21). Policymakers see it as an alternative ‘governing technology’ that provides ‘technical solutions’ to political and ideological problems (Ong, 2006: 3). From a Foucaldian perspective, involvement of private individuals introduces ‘market-driven truths and calculations’ into the ‘systematic and pragmatic guidance of everyday conduct’ (Ong, 2006: 6). In developed states, PPPs often complement state functions. But in developing countries, they may in fact compensate for the inability of states to enforce their rules (Risse, 2011: 4, 20). In both contexts, neoliberal approaches to governing have resulted in phenomena such as the ‘managerial state’ in which a core function is to make ‘efficiency savings’ for prioritized stakeholders (Clarke & Newman, 1997: x).

Transnational PPPs are another frequently occurring form of partnership, albeit one that that transcends national boundaries. These arrangements are understood to be structures through which ‘nonstate actors co-govern along with state actors’ across international borders (Shäfferhoff, Campe et al., 2009: 451). For example, private organizations have been involved in initiatives such as the World Commission on Dams to develop global rules in policy areas where the multilateral system cannot find a ‘zone of agreement’ (Dingwerth, 2005: 71). In another way, this form of PPP may involve transnational actors that engage in collaborative governance with states on their own turf, such as Amnesty International and Greenpeace (Liese & Beisheim, 2011: 137). Their capacity to influence the policy direction of ‘target states’ depends on domestic structures (i.e. institutions and laws) and the degree to which the issue in question is internationalized by bilateral and multilateral instruments (Risse-Kappen, 1995). In other words, transnational PPPs can provide ‘rules or services that were simply absent before’ (Liese & Beisheim, 2011: 5).

Privatization critics argue that forms of ‘hybrid authority’ (Andonova, 2010) such as these can have negative consequences for accountability and legitimacy concerning the general public (Shäfferhoff et al., 2009: 453). They arguably emerge in ‘areas of limited statehood’ (Risse, 2011: 1), where external and internal forces contest efforts by the state to monopolize the exercise of authority (Barker & van Klinken, 2009; Migdal, 2001: 263). The state’s capacity may be circumscribed along a range of dimensions such as tracts of territory, certain policy sectors, and segments of the population in different ways over time (Risse, 2011: 5). This definition of ‘limited statehood’ is useful, but excludes the world’s prolific number of consular offices that operate under restrictive circumstances: pressure to at least formally refrain from interfering with activity in their host’s territory (Brand, 1994). Further, their relative isolation from the state proper means that the institutions lack access to a full range of resources that might otherwise be available at home (Palmer, 2012: 163). As part of an attempt to overcome these challenges, consular officers have looked to alternative instruments for a solution such as partnerships with private individuals in their extraterritorial setting, as evidenced in the Indonesian case.

ESTABLISHING THE SYSTEM

Arrangements between the Indonesian consulate and private employment companies in Hong Kong are an example of a transnational PPP that operates in an extraterritorial setting. These PPPs are best understood in the context of Indonesia’s institutional and legal relationships with employment companies at home, where public actors can hold private individuals accountable for incidental costs of the overseas employment of Indonesian citizens, such as repatriation. Much of this financial risk was in fact offloaded to private insurers in the aftermath of the 1997 Asian Financial Crisis, as more Indonesians took up gainful employment outside the country. Nonetheless, state institutions in Indonesia continue to hold recruiters financially accountable for a wide range of migration matters that arise in the territory of another state. As part of this approach, the law also requires Indonesian employment companies and consular offices to interact with private recruiters overseas.

Indonesia introduced a role for the private sector into the state migration programme as early as 1970 – a development it identifies as the origins of a PPP between the Government and private employment companies (KBRI; Sekretariat Negara, 2008). The recruitment industry has continued to play an important part in the administration of formally organized labour migration from Indonesia since that time. Under the programme, it is these companies, rather than Government, that are largely responsible for securing overseas employment for migrant workers (Killias, 2009, 2010). In a complementary division of labour, Indonesian public institutions help to open up labour markets overseas while playing the role of regulator for the recruitment industry. As part of its regulatory function, the state rewards licensed employment companies by restricting the number of recruiters allowed to participate in the programme. Migrants are required by law to use their services. Domestic workers, for example, are required to move through ‘agent-to-agent’ arrangements in which Indonesian and overseas employment companies divide administrative functions territorially. In this and other cases, the state effectively guarantees the privileged position of a transnational network of private recruiters.

This framework creates a defined space for employment companies to play a role in the day-to-day operation of the programme. Licensed recruiters are required to prepare labour for deployment, a task that includes liaising with a wide range of public institutions in Indonesia. For example, employment companies interact with Immigration Offices for travel documents and the National Agency for the Placement and Protection of Overseas Indonesian Workers (hereafter, BNP2TKI) for overseas identity cards, processes that account for around a week or so of the many months that some recruits spend in employment companies’ training centres (Rudnyckyj, 2004: 417). Licensed companies also play an independent role in deciding what regions of Indonesia become sources of labour migration under the programme. The majority of migrant workers from Lombok, for example, go to Malaysia and Saudi Arabia largely because employment companies promote these destinations. Similarly, residents of Aceh do not have the same level of access to the state migration programme, as licensed recruiters choose not to set up offices in that province. Licensed recruiters, then, play an important role in not just the operation of the programme, but also ensuring its success.

Employment companies must prove that they are capable of meeting the financial demands that the state may impose on them to obtain a licence. Recruiters are required to demonstrate that they possess substantial assets and deposit a bond (Law No. 39/2004: article 13b-c). It is on the back of these financial commitments that manpower officials can coerce licensed recruiters to comply with their demands. Companies that ignore government instructions may be disciplined with administrative sanctions, which include warning letters, moratoria on the right to deploy workers, and forfeiture of the bond (Ministerial Regulation No. 5/2005: article 3a-e). The Minister for Manpower sanctioned this policy in 1970 with a regulation that required employment companies to underwrite ‘various incidents’ involving deployed workers (Ministerial Regulation No. 4/1970: section 3). However, a report by the National Auditing Agency suggests that the Ministry may operate a shadow system for licensing and disciplining, one in which private individuals are offered exemptions from rules in exchange for compliance with other policies or requests (Cribb, 2011). Not all recruiters had fulfilled financial requirements and some companies’ bonds remained with Ministry years after they formally ceased to operate (BPK, 2006: 122).

Complementary legal frameworks help shift responsibility for covering incidental costs of labour migration to the private sector. A motivation for doing so is the cost of assisting citizens with labour and other legal matters outside Indonesia. Toward the end of the New Order (1966-98), the Minister of Manpower offloaded liability for costs arising from workplace accidents, retrenchments and other common migration matters to private insurers in Indonesia, effectively getting recruiters and the state off the hook. Migrants pay for the policy but not everyone is told they have one. Further, returning migrants frequently find that they need a letter from the Indonesian embassy to make a claim. The ratio of pay-outs to reports of covered items is extremely low as a result, with only one in six receiving compensation (Interview with official from the Directorate for Protection in BNP2TKI, June 2010). But officials have been known to make insurers and recruiters cover costs for which they are not formally liable like repatriating migrant workers who run away from their employers. In practice, then, the arrangement is first and foremost a means to make private individuals in Indonesia pay for matters concerning Indonesian citizens overseas.

As part of the system, employment companies are required to develop partnerships with overseas recruiters. In a few cases, Indonesia-based companies set up operations in destination countries (perwalu, perwakilan luar negeri). But most Indonesian recruiters work through overseas business partners with whom Indonesia requires they sign a cooperation agreement (perjanjian kerja sama). Overseas employment companies are expected to promote Indonesian labour and collect job orders from employers, tasks that were formerly performed by Indonesian embassies. With time, they grew to play a significant role in coordinating migration processes from their side of the border, picking up workers from their port of entry and sorting out administrative demands imposed by the host state such as the organization of identity cards and medical examinations. Private individuals overseas are also known to facilitate processes for returning the workers to Indonesia. Many of these requirements were formalized in a regulation concerning recruitment to Saudi Arabia (Ministerial Decree No. 196/1991). Indonesia introduced them in a few other destination countries through bilateral agreements, but later imposed them in all destination countries with the passing of the country’s first piece of labour migration-specific legislation (Law No. 39/2004: article 24).

Indonesia’s consular offices should monitor overseas recruiters in their host setting. But the law does not offer technical instructions for doing so (Law No. 39/2004: article 25). Consulate staff set their own criteria, which differ from country to country as a result. The accreditation system is one mechanism commonly used to regulate overseas recruiters, paralleling the licensing arrangement in Indonesia. For example, the Embassy in Singapore accredits local recruiters who in addition to other technical criteria respond to their calls for assistance with cases concerning migrant workers. By contrast, the Embassy in Kuala Lumpur does not operate a formal accreditation system at all, claiming that doing so could result in a bilateral dispute with Malaysian authorities about jurisdiction. Nonetheless, it takes note of uncooperative recruiters and reports them to the Ministry of Manpower in Indonesia for further action. In Malaysia and Singapore, Indonesia has limited capacity to control recruiters because of legal and political factors that circumscribe extraterritorial intervention. In Hong Kong, a less exclusive form of territorial exclusivity has been established to manage international migration, which relies heavily on power generated by its engagement in PPPs.

The system in Hong Kong

On the back of a Hong Kong immigration policy, the Indonesian consulate has built a system through which it can discipline local employment companies. The Hong Kong Immigration Department requires consular offices to endorse their citizens’ employment contracts for domestic work before visa applications may be submitted (Immigration Department, 2008: point 23(g)). Provisions were made for this kind of external intervention partly because internal mechanisms for dealing with certain aspects of international labour migration were not always effective. The policy may have also been one of the concessions made to the Philippines, which, in return for encouraging citizens to take up domestic employment in Hong Kong from the mid-1970s, may have demanded a mechanism to control the conditions under which they could migrate. Indonesia has certainly done so in other countries since the early 1980s (Ditjen Binaguna, 1982: 4). But whatever the reason, the Indonesian consulate has harnessed Hong Kong’s migration policy to enforce the accreditation system that consular staff use to impose demands on local employment companies.

The Consulate only permits a quarter of the 1,000 or so employment companies that Hong Kong licenses to provide job-matching services to foreign domestic workers from Indonesia. To be eligible for approval, Hong Kong recruiters must be established according to Hong Kong laws, and agree to other conditions as required by Indonesia (Law No. 39/2004: article 25(2)). Before 2009, the Consulate only used general criteria to assess local employment companies, requiring them to have a permanent office, a boarding house, and Indonesian-speaking staff. These conditions were based on earlier regulations designed for partnership with Saudi Arabia-based recruiters (Ministerial Decree No. 195/1991: article 20; Ministerial Regulation No. 1/1991: article 9b-c). In 2009, however, the Consulate introduced a Business Accreditation Certificate (BAC) that permits Hong Kong businesses to ‘operate an Indonesian agency’ (KJRI, 2009). The Consulate decided against calling the document a licence because of uncertainty about how the Hong Kong Administration would respond to the representative of another state licensing employment companies it has already authorized. Nevertheless, the document is in effect a licence that gives Hong Kong recruiters permission to broker employment of Indonesian citizens in the territory.

Accredited employment companies must join the Hong Kong Association of Indonesian Labor Recruitment Companies (Asosiasi Perusahaan Pengerah Tenaga Kerja Indonesia Hong Kong, APPIH). Membership is a formal requirement for accreditation, mirroring an informal demand in Indonesia that recruiters there do the same. Before submitting applications for permission to recruit in Indonesia, employment companies must first obtain a recommendation letter from a professional association to confirm that their documents are in order (e.g. AJASPAC, 2008). The arrangement saves officials the time needed to check for completeness, a practice that is characteristic of the Indonesian bureaucracy more generally. Consulate staff sits on the Hong Kong Association’s advisory board and uses its communication mechanisms to convey changes in Indonesian policy, doing so partly because it maintains an up to date database of contact details. As this suggests, the Consulate sees the Association as a ‘useful tool’ for coordinating the activity of Hong Kong employment companies (Interview with Consul-General in Hong Kong, October 2009). The arrangement also helps the Consulate decide whether to notarize work contracts that Hong Kong recruiters submit. As noted by the High Court in Hong Kong, ‘the Consulate will generally only notarise domestic helper employment contracts obtained through Asosiasi members’ (Court of First Instance: point 3).

The Consulate evaluates Hong Kong recruiters each year. Employment companies that fail the assessment risk losing their accreditation. Initially, approval was administered in the Labour Section by a Manpower official. But in 2009, the Consul-General created an inter-ministerial team to perform the function, responding to demands by local employment companies to involve more officials in the process. Control over functions to do with the state migration programme has been the cause of turf wars within this and other Indonesian embassies, and evidence suggests that this competition has even resulted in conflicts between embassies in different jurisdictions (Sim & Wee, 2009: 180). In Hong Kong, the arrangement requires local recruiters to attend an interview as part of the process to extend their licence. Consulate staff reportedly asked them to give information on the number of workers deployed and to comment on how they have complied with Indonesian regulations. Their facilities are sometimes reassessed as part of the process, and the encounter gives the Consulate an opportunity to gather information about their experience operating as partners of Indonesian companies. The decision to renew their BAC is made by the licence renewal team, and the result is then communicated by a Foreign Affairs official. Employment companies that fail the assessment may have their licences cancelled, and they are informed that future applications for endorsements should be rejected.

The Consulate uses the threat of blacklisting to ‘guide’ the behaviour of local employment companies. In Indonesia, the sanction is known as skorsing and refers to the temporary or complete cessation of recruiters’ activities concerning migrant labour (Ministerial Regulation No. 5/2005: article 3b). A form of blacklisting that is an alternative to fines, called skorsing, effectively puts licensed companies on a watch list that also prevents them from applying for an extension of their licences (Ministerial Regulation No. 38/2006: article 8(2)). In Hong Kong, employment companies are given three warnings in response to illegal or otherwise unacceptable conduct. Once applied, the Consulate should refuse requests for endorsements by those recruiters. Not only are blacklisted companies unable to recruit workers from Indonesia, they are also unable to secure work permits for Indonesians already in Hong Kong. As this suggests, Hong Kong recruiters are eager to cooperate with the Indonesian consulate partly because denying them access to Indonesian workers can reduce their profitability. Consular officials are aware of the power that they gain through this system and claim to exercise it carefully so as to avoid accusations that they ‘abuse’ it (Interview with Consul-General in Hong Kong, February 2008). Under Indonesia’s approval system, then, employment companies in Hong Kong are effectively subject to a dual system of regulation.

This system helps the Consulate to implement Indonesian rules such as the requirement that Indonesian citizens report to their government representative overseas (Law No. 23/2006: article 4). Overseas recruiters are legally required to facilitate this process for domestic workers, on the grounds that distances between the places where migrants work and their consular office may otherwise prevent domestic workers from registering (Law No. 39/2004, explanatory note for article 71). Registration provides officials with an opportunity to compile an alternative database of workers’ personal information. In Hong Kong, Consulate staff have relied on these records, for example, when organizing the repatriation of corpses, as migrants’ names and dates of birth are not always correctly recorded in their passport (Ford & Lyons, 2011; Palmer, 2012). Foreign Affairs officials claim that lawmakers were too idealistic in the formulation of these provisions, arguing that the state has limited capacity to enforce national laws in the borders of another state. In fact, the Labour Attaché in Malaysia has resisted seeking compliance partly because the Embassy lacks an effective enforcement mechanism. But through the accreditation system in Hong Kong, the Indonesian consulate has developed the necessary means to at least partly do so.

To illustrate, the Consul-General made attendance at the Welcoming Program by newly-arrived migrant workers mandatory in 2007. The programme constitutes part of the Consulate’s strategy to disseminate information about life and work in Hong Kong such as labour rights inscribed in the Employment Ordinance. Attendees watch a DVD produced by the Hong Kong Labour Department that uses role-play to show examples of what employers should not expect of domestic workers such as give massages or clean apartment windows without the necessary safety equipment. The audio-visual show also explains how Hong Kong institutions can assist with problems such as employers who refuse to pay wages. As part of the programme, Indonesian officials deliver presentations on the services that workers can expect the Consulate and Hong Kong employment companies to provide. For example, participants are told that Hong Kong recruiters should discourage employers from terminating employment because of dissatisfaction with their performance. For migrant workers on second and subsequent contracts, the Consulate offers limited cooking, cleaning, language and childcare classes at its premises. But local employment companies are expected to provide on-going training opportunities for those on their first contract in their own facilities.

As these examples indicate, Indonesia may require Hong Kong recruiters to perform a range of roles to achieve national objectives. In another example, the Consulate also requires Hong Kong employment companies to mediate conflicts that arise between Indonesian workers and their employers. The Consulate facilitates settlement of some disputes through its Labour Section, but the vast majority of cases are resolved by Hong Kong recruiters without consular assistance. In addition, employment companies are expected to help migrant workers report employers for alleged criminal behaviour. In many cases, however, NGOs and migrant support groups perform that function (Sim, 2003), particularly after workers have left their employers’ household. But while they are still there, Hong Kong recruiters remain Indonesians’ first port of call. The Consulate requires them to employ Indonesian-speaking staff so that migrants can communicate in their national language. And by allowing Hong Kong employment companies to act as a ‘front office’ for such matters, the Consulate is freer to focus on providing conventional, consular services (i.e. services not related to employment). But doing so effectively contracts out the responsibility of Consulate staff to assist and support Indonesian citizens to private individuals, effectively giving Hong Kong recruiters broad power over migrant labour.

THE LIMITS OF PARTNERSHIP

Despite the significant benefits derived from these partnerships, the Consulate’s ability to control activity of Hong Kong employment companies concerning Indonesian migrant labour is limited in some ways. Accredited recruiters have a reputation for siding with employers when settling workplace conflicts, accusing migrant workers of laziness, sloppy work, and of treating workplaces like their homes. They also service demand for new workers with better skills and different personalities, for example, through offers to replace workers free of charge as part of an attempt to attract more business (e.g. Technic Employment Service Centre). Some companies offer unlimited replacements, but most guarantee a limited number within the first twelve months (e.g. Constable, 2007: 66). Furthermore, Hong Kong NGOs and recruiters in Indonesia report that some Hong Kong companies even encourage employers to terminate their workers’ contracts once recruitment debts have been settled (Sim & Wee, 2009: 175). These sorts of practices clearly contravene the Consulate’s stated policy to protect the employment of existing workers.

Some Hong Kong recruiters also promote Indonesian labour at below the minimum wage. The practice started at the end of the 1990s when they and their Indonesian partners identified demand for ‘discounted’ domestic labour in working class areas of the city. This development emerged at around the same time unemployment and the value of the Hong Kong dollar rose in Indonesia following the 1997 Asian Financial Crisis. Also, employment companies and their informal network of recruiters in Indonesia started to disburse financial inducements to women as part of a strategy to shore up sufficient labour supply (Barker, Lindquist et al., 2009; Lindquist, 2010, 2012). Newly-arrived migrants in Hong Kong often hide the fact that they have been promised a lower wage perhaps because they want the work and in recognition of the fact that Indonesian officials are complicit (Interview with migrant worker in Jordan, October 2010). As a policy, the Consulate only disciplines companies that cause migrants to receive discounted wages in subsequent contracts because, in their view, workers should then deserve the contractual wage. However, workers on second and third contracts continue to receive sums below the agreed wage, and claim that they are reluctant to raise the issue with their employers because friends who had done so were sent back to Indonesia and replaced (Interview with migrant worker in Causeway Bay, October 2010).

As a rule, recruiters require workers receiving contractual wages to pay seven monthly instalments of HKD 3,000 (USD 390). Those on discounted wages settle the debt through full wage deductions over five months (AMC, 2001; ATKI-HK, 2007). The use of public loan companies by Hong Kong recruiters to finance migration is partly responsible for the inflated fee. They began utilizing public finance after the Hong Kong Administration took disciplinary action against employers for paying migrants’ wages directly to employment companies (Interview with Chair of ATKI-HK, February 2008). As a result, recruits sign statements in Indonesia in which they acknowledge receiving HKD 21,000 (USD 2,700) to cover the recruitment fee (HKD 18,000) and interest (HKD 3,000) (on file with the author). But, despite what the document states, employment companies in Indonesia do not lend cash to migrant workers. They provide services without requiring upfront payment. In other words, the debt is an acknowledgement of services rendered, albeit at much higher rate than is formally sanctioned. Employment companies in Indonesia and their recruits then sign a string of documents to transfer ownership of the debt to Hong Kong-based financiers (on file with the author). But responsibility of Indonesian recruiters does not cease there, because as guarantor, they are financially liable for defaults in the first three months, after which time public finance companies assume the risk (Interview with employment company in Jakarta, August 2009). Migrant workers bring this set of documents with them to Hong Kong and hand them over to the employment company that picks them up at the airport. Recruits arriving without – or who refuse to release – these documents are often sent back to Indonesia.

The Consulate is limited in ability and lacking in political will to reduce the level of fees Hong Kong employment companies extract from migrant workers. The Ministry of Manpower in Indonesia set the ceiling for fees at Rp 15,500,000 (USD 1,600) in 2008 (Dirjen Binapenta, 2008). But Hong Kong employment companies collect much larger sums in practice. Migrant workers continue to pay HKD 18,000 (USD 2,300), a fee that was sanctioned over a decade earlier (APJATI (Asosiasi Perusahaan Jasa Tenaga Kerja Indonesia), 1999; Dirjen Binapenta, 1999). Employment companies in Indonesia explained that of this amount, Hong Kong recruiters typically receive HKD 7,000 while Indonesian companies take HKD 11,000 – an arrangement the Consulate refers to as 7-11 (Interview with Labour Attaché in Hong Kong, November 2009). The Hong Kong recruiters’ cut includes the ‘management fee’, which is illegal according to host laws but was formally authorized by Indonesia until at least 2003 (Government of Indonesia, HOKINDO et al., 2003). Attempts to lower the fee by removing this item from the cost structure have been unsuccessful (see DP2TKLN, 2004). But employment companies in Hong Kong claim that it is the Consulate’s rent-seeking officials and requirement that they employ Indonesian speaking staff, provide training, and operate a shelter, which make it financially unfeasible to charge less (Interview with employment company, November 2009).

In order to guarantee that debts are paid before workers change employers, Hong Kong recruiters require migrant workers to hand over their passports for ‘safe-keeping’ upon arrival. Newly-arrived migrants sign documents in which they surrender their passports (on file with the author). This practice occurs in most – if not all – destination countries. Indonesia has formalized the requirement through memoranda of understanding in some countries (MoU, 2006), sanctioning a practice that officials claim was an attempt to make employers responsible for ensuring the validity of work permits (Interview with Director for the Asia-Pacific Region in BNP2TKI, June 2010). Attempts by Hong Kong government institutions to counter this practice have proved to be ineffective as migrant workers need to report that their passports had been confiscated, when in fact they had been signed over in exchange for a loan. At Hong Kong’s request, and despite lobbying by recruiters, the Indonesian consulate instructed local employment companies to desist from confiscating migrants’ travel documents or risk losing their accreditation (KJRI, 2007a).

Employment companies were apparently ‘very responsive’ (Interview with Consul-General in Hong Kong, 30 October 2009), although the policy shift effectively took away the mechanism used to underwrite migrant workers’ loans. The positive reception was partly due to the fact that a few days earlier the Consulate had pre-empted the industry’s concerns with another policy that denied migrant workers the right to change employment for the first two years (KJRI, 2007b). The Labour Section began setting up a system for managing information about who brought whom to Hong Kong, requiring employment companies to inform migrants’ former recruiters of the intention to change employers (Interview with Labour Attaché in Hong Kong, 6 November 2009). But, after reports surfaced that Indonesia refused to endorse change of employment, migrant worker groups reacted by organizing demonstrations outside the Consulate (ATKI-HK, 2008). The policy was retracted, but the Consulate hesitated to enforce the ban on passport confiscation, pointing to the absence of an alternative mechanism to appease local recruiters. During a Welcoming Program that followed, migrant workers were reminded that Hong Kong employment companies will hold their passports until their recruitment debts have been paid (Fieldwork observation, 3 November 2009).

In another case around confiscation of migrants’ passports, the Consulate was compelled by negative publicity to level sanctions against a Hong Kong recruiter for anti-migrant behaviour. On 20 September 2009, 54 Indonesian migrant workers turned up at the Causeway Bay office of Technic Employment Company (hereafter, Technic) to demand the return of their passports. The organizer was an Indonesian woman who had previously worked in Hong Kong, had settled her recruitment debt, but returned home before her two year contract had expired of her own volition (Interview with the organizer in Causeway Bay, November 2009). This time, however, her employer terminated the employment. Technic refused to return her passport unless she agreed to return to Indonesia to wait for another job, and the Consulate asked for proof that she had repaid her recruitment debt before officials would intervene. In response, she and 53 other Indonesians demonstrated outside Technic’s main office, denying that they voluntarily signed over their passport in return for a loan, attracting attention of passers-by. Technic reacted quickly by returning the travel documents. But after the women left, staff contacted their employers to say that they were now in a position to abscond without paying their debts. In return for terminating the employment, Technic offered to replace the women with new workers from Indonesia free of charge.

The Consulate eventually reacted by announcing that Technic would be disciplined because its actions contravened the requirement to prevent Indonesians from losing their employment in Hong Kong. Just over a month after the demonstration, the Consulate suspended Technic’s accreditation as a disciplinary measure, and the recruiter was informed that future requests for contract endorsements would be refused. The decision was not taken lightly, as Technic was one of the largest employment companies at the time, and was one of the few that placed Indonesian workers with employers prepared to at least pay the minimum wage (Interview with Consul-General in Hong Kong, 30 October 2009). The Consulate did not announce the suspension publicly for diplomatic reasons. However, consulate staff spoke about it openly with migrant workers and concerned organizations in public places (Fieldwork observation in Victoria Park, November 2009). It is common practice for those on the blacklist to channel their business through other companies, enabling them to circumvent the sanction (Interview with unaccredited recruiter in Jordan, August 2011). The Consulate also has a reputation for quietly overturning bans. If nothing else, lack of transparency about blacklisting and even who is on the list demonstrates a weak practice of accountability to the Indonesian citizens the system is purportedly designed to benefit.

Consular officials undermine the potency of the Consulate’s blacklisting system to influence patterns of behaviour in the recruitment industry. Nevertheless, Indonesia’s power is most obvious when the Consulate threatens sanctions demanding some kind of immediate action, as was the case when Technic was told to return passports it was already known to hold. Clarifying that the change of arrangement was due ‘to the recent notification by the Indonesian consulate’ (Technic Employment Service Centre, 2009), Technic contacted migrants asking that they collect their passports. Expressing surprise at the sense of urgency, Indonesian migrants showed evidence that Technic had even contacted their employers (Interview with group of migrant workers in Causeway Bay, November 2009). Those who still had outstanding debts were warned of real and exaggerated consequences for defaulting, but everyone was required to sign documents confirming receipt of their passports in which they also agreed to observe the expiry date of their work permit and cease contacting Technic and its partner in Indonesia – Hasrat Insan Nurani – with employment-related matters, formally absolving both companies of any future responsibility to intervene (on file with the author).

CONCLUSION

It no simple task to unravel the interests of state- and market-based actors, as their ultimate objectives are often aligned. Officials in the Consulate point to the politics of exercising extraterritorial power as the major factor that limits Indonesia’s regulatory function in Hong Kong when in fact they only use it sparingly to intervene against the interests of employment companies in support of Indonesian migrant workers. At the same time, however, their relationships with Hong Kong recruiters can be fraught. But given the negative consequences that the industry’s profit-seeking orientation has for so many Indonesians, critical observers might well ask why the relationships are not more fraught than they are. This is in part explained by the rent-seeking orientation of Indonesian institutions (Robison & Hadiz, 2004), which, if taken to mean an inclination on the part of officials to extract wealth through illegal means (Kunicová, 2006: 143), in this particular case would make the Indonesian consulate more sympathetic toward recruiters’ methods for collecting higher fees from migrant labour because of the greater financial rewards they offer. This situation is further complicated by the fact that consular officers’ colleagues, family, and friends in Hong Kong and Indonesia are often somehow involved in the business of migration. This alignment of interests means that the Consulate often tempers the power it could otherwise exercise over recruiters in Hong Kong.

The fact that Hong Kong requires foreign states to endorse workers draws attention to an unusual situation where one state delegates authority over migration matters within its own territory to other states. The specificity of the Hong Kong context perhaps makes this approach more possible than in other places because, as a Special Administrative Region of China, the Hong Kong administration exercises a high degree of autonomy from the central government in the area of immigration policy. At the same time, it is this fact that makes Hong Kong more representative of other states than other autonomous regions, as the Immigration Department manages the procedures for granting people entry to the territory. What is clear, however, is that the decision to incorporate foreign states into its immigration regime provides a kind of ‘institutional fix’ (c.f. Rodriguez, 2010: xxii) that partly harmonizes tensions that arise as a result of labour sending and receiving states’ orientation to migrant workers. The home government is often put under public pressure to intervene in matters concerning their citizens working in the territory of other states, whereas host governments bristle at the very thought of external intervention. Examined more closely, however, this Hong Kong-Indonesia case study reveals that the sum of those states’ actions are in fact a response to the idea of responsibility for migrants or – more accurately – the desire to shirk it.

This system begs questions about the social contract between state and society, which provides a useful tool for interpreting the legitimacy of state authority. Political geographers have long eschewed the idea that the sub-discipline should focus on strictly fixed territorial forms, advocating instead broader research on the ‘contested relationship between state and society’ (Cox, 2008: 89). It is here that extraterritorial authority over labour migrants in Hong Kong can make a further contribution. For Indonesia, the decision to operate extraterritorially is perhaps most intuitive, as states have a history of using citizens to justify intervention in others’ territory (e.g. King, 2008), and because officials are inclined to seek ways for expanding their power base rather than limiting it (Dunleavy, 1985). But, for Hong Kong, the delegation of authority to foreign states such as Indonesia is a situation in which a state uses citizenship instead of territory to mark boundaries for the reach of other states’ power. However, frequent protests on the part of Indonesian migrant labour show that the workers view the Indonesian consulate’s extraterritorial interventions critically, and that they would prefer a stronger commitment on the part of Hong Kong institutions to help solve their problems.

Finally, and most importantly in the context of this discussion, lessons learned from Indonesia’s extraterritorial interventions in Hong Kong are also relevant for the study of world politics. They demonstrate how public actors may feed into transnational networks, where they can ‘pursue their own agenda, independently from and sometimes even contrary to the declared policies of their national governments’ (Risse-Kappen, 1995: 4). This may well be the case with the Consulate ‘mafia’ in Hong Kong, as other Indonesian government institutions lament that the activity is often beyond their control, both jurisdictionally and otherwise. However, this case study also draws attention to a different kind of transnational PPP that operates in the extraterritorial setting itself. The Indonesian consulate engages in commercial and political relations with market-based actors instead of the Hong Kong administration for a range of reasons. Indonesia’s rent-seeking orientation toward capital and the fact that the opportunity simply presented itself only partly explain this public policy choice. Just as significant is the fact that these transnational PPPs offer a mode for conducting political relations across borders that are more dynamic and flexible, which contrasts starkly with the bureaucratic and political processes of the state-to-state model that frequently complicate efforts to govern international migration.

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