INDONESIA NEW REGULATION ON THE UTILIZATION OF EXPATRIATE MANPOWER

Responding to a number of protests from business players, on 29 March 2018, the President of Indonesia decided to simplify the regulatory landscape on the utilization of the expatriate manpower under Presidential Regulation No. 20 of 2018 on The Expatriate Manpower Utilization (“PresReg 20/2018”). The PresReg 20/2018 revokes the previous Presidential Regulation No. 72 of 2014 on the Utilization of Expatriate Manpower and Implementation of Education and Training for Understudy Workers. Under the PresReg 20/2018, the long process procedure to legally employ expatriate manpowers has been significantly shortened and the process will be conducted through data sharing and electronically integrated (online).

Before PresReg 20/2018 came into force, employer would apply for IMTA to the Minister of Manpower or any appointed official (the “Relevant Minister”) in order for a company to legally employ an expatriate. However, the PresReg 20/2018, which, for the first time in any material way, seeks to cut certain requirements as to what provisions must be applied. One of the notable requirements that has been removed is the obligation to obtain IMTA, and as a substitution of IMTA, Foreign Manpower Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing / “RPTKA”) is deemed as a work permit from the government under the PresReg 20/2018. As no other permits required for employing expatriate manpower, the PresReg 20/2018 prescribes employer to satisfy the following conditions:

1. Submitting proposed foreign worker(s) data as stipulated under Article 14 of the PresReg 20/2018 to the Relevant Minister;

2. Obtaining notice and acknowledgement of receipt from the Relevant Minister;

3. Once receiving such notification, employer shall pay compensation fund annually to appointed bank account for the utilization of each expatriate manpower. Such compensation will be deemed as non-tax state revenues;

4. A registered expatriate manpower, who works more than 6 (six) months, shall be secured with employee social security (Jaminan Sosial Ketenagakerjaan) and/or insurance policy issued by an Indonesian insurance company;

5. Facilitating expatriate manpower witheducation and training of Indonesian language.

In addition, other requirements for employing an expatriate manpower remain unchanged from the previous regulation, such as having a Limited Stay Visa and Limited Stay Permit, that can be applied either by employer or foreign worker. To support the supervisory role of the government, employer shall report annually regarding the utilization of expatriate manpowers.

The PresReg 20/2018 prescribes every employer, excluding government institution, representatives of foreign countries, and international bodies, to implement the new provisions following its entry into force within 3 (three) months since the enactment date. In the event that employer negligently or intentionally fails to implement provisions pursuant to PresReg 20/2018, he will be subject to sanctions governed in the prevailing laws and regulations.