This site uses cookies, if you continue without changing your settings, we'll assume that you are happy to receive all cookies. Click here to learn how to change your cookie settings.

Continue

New Presidential Regulation on Utilization of Foreign Workers

New Presidential Regulation on Utilization of Foreign Workers

15 May 2018

1

Introduction

 

The President has enacted Presidential Regulation ("PR") Number 20 of 2018 on Utilization of Foreign Workers ("PR 20/18").  PR 20/18 will come into force on 29 June 2018 ("Effective Date") and revokes PR Number 72 of 2014 on the same subject ("PR 72/14").  This regulation aims to simplify procedures and reporting obligations which are expected to increase investment into Indonesia.

2

Notable differences between PR 72/14 and PR 20/18

 

  •  

 

PR 72/14 requires employers to (i) submit and receive approval over a plan to employ foreign workers ("RPTKA"); and (ii) obtain the permit to employ foreign workers ("IMTA"). PR 20/18 only requires that employers obtain the RPTKA approval. PR 20/18 now allows business entities in form of a firm and/or CV to employ foreign workers.

 

  •  

 

PR 20/18 now allows business entities in form of a firm and/or CV to employ foreign workers.

 

  •  

 

PR 72/14 specifies that a RPTKA may be provided for a period of 5 years (for its initial or extension period) and an IMTA may be provided for an initial period of 1 year and may be extended for 1 year (or 2 years for BOD or BOC members). PR 20/18 does not specify a specific validity period for the RPTKA.

 

  •  

 

PR 72/14 requires companies to obtain RPTKA and IMTA for members of the BOD or BOC residing in Indonesia. PR 20/18 specifies that companies do not require RPTKA for members of the BOD or BOC residing in Indonesia who also are company shareholders.

 

  •  

 

PR 72/14 specifies that employers cannot employ foreign workers employed by another employer. PR 20/18 specifies that employers in certain sectors* may employ foreign workers employed by another employer. Such foreign worker may be employed pursuant to the duration of the first employment contract.

*To be clarified in future regulation.

 

  •  

 

PR 72/14 specifies that an employer employing foreign workers must contribute to the State annual compensation fund ("DKP") except where the employer is a government institution, international organization, foreign state representative, or a social or religious institute. PR 20/18 also provides that the DKP payment obligation is waived for foreign workers in certain positions* employed by education institutions.

*To be clarified in future regulation.

 

  •  

 

PR 20/18 specifies that foreign workers working for more than 6 months must be enrolled in the manpower social security program or have similar coverage provided by a local insurance company. We note that Ministry of Manpower ("MOM") Regulation Number 16 of 2015 (which refers to PR 72/14) specifies that foreign workers employed for more than 6 months must be enrolled in the national social security program.

 

  •  

 

PR 72/14 specifies that foreign worker utilization reports must be submitted semi-annually and is separate from the mandatory manpower report. PR 20/18 specifies that the foreign worker utilization reports are to be submitted annually.

3

The MOM is currently drafting necessary implementing regulations to PR 20/18 and aims to issue them prior to the Effective Date. Pending issuance, the required procedures and reporting obligations for the utilization of foreign workers remains per existing practice (i.e. MOM Regulation Number 16 of 2015 as amended by MOM Regulation Number 35 of 2015).

For questions and comments, please contact:

Indra Dwisatria - Senior Associate, Indonesia: indra.dwisatria@dnfp.com

Karina Antonio - Senior Associate, Indonesia: karina.antonio@dnfp.com

BACK TO LISTING



Our practice areas

Our disputes practice is recognised by Legal 500 Asia Pacific – Indonesia 2018, and our highly skilled and experienced lawyers in our...

Our people

Our team at DNFP has a wide range of backgrounds and its members are well established leaders in the local market. We believe that diversity of...