Presidential Regulation No. 20 of 2018 regarding Utilization of Foreign Workers was issued on 29 March 2018, which enters into force on 29 June 2018 (“PR 20/2018”) and subsequently revokes the Presidential Regulation No. 72 of 2014 regarding Utilization of Foreign Workers and the Implementation of Education and Training for Assistant Employees (“PR 72/2014”). The spirit of PR 20/2018 is to support the national economy and to expand work opportunities through the increase in investment. To implement PR 20/2018, the Minister of Manpower of the Republic of Indonesia (“MOM”) issued Regulation of the MOM No. 10 of 2018 regarding Procedures of Utilization of Foreign Workers on 11 July 2018 (“RM 10/2018”) which revokes Regulation of the MOM No. 16 of 2015 regarding Procedure of Utilization of Foreign Workers as amended by Regulation of the MOM No. 35 of 2015 (“RM 16/2015”). These new regulations simplify the licensing procedure to employ foreign workers.
Some Key Changes in the New Regulations
1. Possibility to employ foreign workers who have been employed by other employers
PR 72/2014 prohibits foreign workers to have double position/title, in which any employer is prohibited to employ foreign workers who have been employed by other employers. Rather, PR 20/2018 stipulates that the employer in particular sectors may employ foreign workers who have been employed by other employers, provided that the tenure of the foreign workers shall be the same as the tenure stipulated in the work agreement between the said foreign workers and the first employer.
Additionally, PR 20/2018 prescribes that MOM shall issue a Minister’s Regulation concerning the position that is possible to be held by a foreign worker who has been employed by other employers upon obtaining a recommendation from relevant institutions. Note that, up to the date of this memorandum, MOM has not yet issued the regulation on the foregoing matter.
PR 20/2018 prescribes that RPTKA also applies as IMTA and consequently abolish provisions regarding IMTA. Moreover, RM 10/2018 also abolish the requirement to obtain a recommendation from the relevant institution in accordance with the prevailing regulations in the relevant institution.
Under RM 10/2018 Notification is defined as an approval to utilize foreign workers issued by Directorate General of the Development of Manpower Placement and Expansion of Employment Opportunity (Direktur Jenderal Pembinaan Penempatan Tenaga Kerja dan Perluasan Kesempatan Kerja) as the basis of the issuance of ITAS (“Notification”). An employer who wishes to utilize foreign workers must submit the prospective foreign workers’ information to MOM and MOM will issue Notification accordingly and the Notification will be also copied to Directorate General of Immigration (Direktorat Jenderal Imigrasi – “DGI”). The employer must pay DKP-TKA in the amount of US$100 (one hundred United States Dollar) for each position for each person and for each month, at the latest 1 (one) working day upon obtaining Notification. The period of Notification shall be in accordance with the period of work agreement or the renewal of the work agreement.
In addition to the above, the employer who utilizes foreign workers as a member of the Board of Directors or the Board of Commissioners with the shareholding in accordance with the prevailing laws and regulations and diplomatic and consular officials in the representative office of a foreign country shall not be required to obtain Notification.
4. The obligation to facilitate Indonesian language education and training for foreign workers
PR 20/2018 stipulates additional obligation for the employer, i.e to conduct education and training of Indonesian language for the foreign workers. The Indonesian language education and training may be conducted by the employer or in collaboration with any Indonesian language training institution. Failure to facilitate Indonesian language education and training will result in a temporary cease of the licensing process of the foreign workers.
5. Reporting Obligation
PR 20/2018 changes the reporting obligation from every 6 (six) months (under PR 72/2014) to become an annual report.
We still need to see further measures taken by MOM on these new manpower regulations given some parts may be unclear, including to see any policy to be applied by MOM.
This client alert is intended to provide an overview only and may not cover all provisions of the new manpower regulations discussed herein, thus, cannot be deemed as a legal advice. If you need a more detailed discussion and/or advice, please do not hesitate to contact us.