President of Indonesia Joko Widodo has issued Regulation No. 20 of 2018 on Expatriate Placement Plan (“Reg 20/2018”). This regulation has become effective since 26 June 2018. The new presidential regulation replaced the old regulation No. 72 of 2014 on Expatriate Placement Plan and Implementation of Education and Training of Companion Workforce (“Reg 72/2014”). If you are looking to work in Indonesia or want to employ foreigners to work in Indonesia, get to know these important changes.
Work in Indonesia: Key Changes Stated
The following are the key changes stated in Reg 20/2018:
IMTA is no longer required
In PresReg 72/2014, employers employing foreign workers are required to obtain IMTA (work permit) from the Manpower Minister.
Following the enforcement of the new regulation, IMTA is simplified as it is replaced bt RPTKA (Expatriate Placement Plan).
RPTKA is no longer mandatory for directors and commissioners that are also the shareholders
In PresReg 72/2014, employers of foreign workers are required to have RPTKA approved by the Minister of Manpower, without exception.
Following the enforcement of the new regulation, RPTKA is required only for certain positions. The following positions are no longer needed to apply for RPTKA:
- Shareholders that are also directors or commissioners;
- Diplomatic and consular officers; and
- Foreign workers that are needed by the Indonesian government.
Existence of emergency RPTKA
Request for emergency RPTKA can be submitted by the employer no later than 2 days after the arrival of the foreign workers. In accordance with Regulation No. 16 of 2018 on Government Goods/Services Procurement, emergency refers to:
- Natural disasters, non-natural disasters, and/or social disasters;
- Conducting search and rescue operations; and/or
- Damage to facilities / infrastructure that can disrupt public service activities.
Job restrictions for foreign workers
Foreign workers are not allowed to occupy positions related to personnel or human resource matters. Other than that, according to Manpower Decision No. 40 of 2012, these are other positions that are prohibited from being occupied by foreign workers:
- Industrial Relation Manager;
- Employee Career Development Supervisor;
- Chief Executive Officer;
- Career Advisor;
- Job Advisor;
- Job Advisor and Counseling;
- Employee Mediator;
- Job Training Administrator;
- Job Interviewer;
- Job Analyst; and
- Occupational Safety Specialist.
Have you heard that since September 2019, the government of Indonesia has welcomed foreign workers to take up newly opened positions? Check out the newest positions for foreign workers in Indonesia.
Compensation fund on the use of foreign workers
Employers of foreign workers are required to pay the DKP (usage compensation fund) amounting to USD 100 per position per person monthly. This fund will be taken as non-tax revenue.
If this obligation is violated, employers may be subject to sanctions in the form of revocation of notification. This notification is an approval to employ foreign workers, which is issued by the Directorate General of Manpower Placement.
Including foreign workers in insurance program
It is mandatory to include foreign workers in insurance program. If these foreign workers have worked for more than six months in Indonesia, their employers are required to register them with BPJS Ketenagakerjaan (employment social security). This is a new obligation that was not previously regulated under Reg 72/2014.
Obligation to facilitate education and training in Indonesian language
Reg 72/2014 stipulates the obligations of employers of foreign workers. Nonetheless, in PresReg 20/2018, these are more obligations for employers, with the addition of facilitating education and training in Indonesian language to foreign workers.
Use of foreign workers’ report
Reg 20/2018 requires employers of foreign workers to report the usage of foreign workers to the Minister of Manpower. Under the new regulation, the new term for reporting is once a year (annually), not every six months.
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Sanctions and Transition Period
Employers of foreign workers who do not comply with the newly enacted regulation will be penalised accordingly.
With regard to transition period, all permits that were owned and whose applications were submitted before 26 June 2018 will remain valid until the expiration date and be completed by referring to the provisions in Reg 20/2018 respectively.
Consult with Cekindo before Recruiting Any Foreign Workers to Work in Indonesia
With the regulations that change constantly, you are advised to seek a professional who keeps up with the latest amendments of regulations.
Cekindo has a team of professional consultants and legal specialists with deep knowledge of and extensive experience in handling foreign workers recruitment as well as visa and work permit application in Indonesia.
Get in touch with us today by filling in the form below or visit our offices in Jakarta, Bali and Semarang.
Daris Salam
COO Indonesia at InCorp Indonesia
With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.