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W&P Newsletter – Simplified New Rules on Foreign Workers (TKA) in Indonesia

President Joko Widodo has officially signed Presidential Regulation No. 20 of 2018 on Foreign Worker Utilization (“PR No. 20/2018”), which will come into force on 29 June 2018. Upon its forthcoming operation, the new regulation will replace and revoke Presidential Regulation No. 72 of 2014 on Utilization of Foreign Workers and Implementation of Education and Training of Indonesian Workers as the Foreign Workers’ Associates (“PR No. 72/2014”).

As summarized below, PR No. 20/2018 will bring greater ease of foreign worker licensing in Indonesia.

Waiver of Foreign Manpower Utilization Permit (IMTA)

PR No. 20/2018 simplifies bureaucratic procedures for obtaining the license to recruit foreign workers (Tenaga Kerja Asing, “TKA”) by implicitly waiving the requirement that employers obtain the Foreign Manpower Utilization Permit (Izin Mempekerjakan Tenaga Kerja Asing, “IMTA”) when hiring TKA.

Note that PR No. 20/2018 does not explicitly exempt an IMTA, but this interpretation arises from the requirement under PR No. 20/2018 to only require employer of TKA to apply for a Foreign Worker Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing, “RPTKA”), followed by reporting/notification to the Minister of Manpower (“MOM”) subsequent to the RPTKA. 

More Relaxed Rules on Foreign Worker Utilization Plan (RPTKA)

In addition to doing away with the IMTA requirement, PR No. 20/2018 also provides greater convenience to employers by relaxing the RPTKA requirement, particularly by waiving the RPTKA requirement if an employer recruits: (a) a foreign individual shareholder who is also a Director or Commissioner in the company, (b) a diplomatic or consular officer to a foreign country representative, or (c) a TKA employed for the particular type of work deemed necessary by the Government, the details of which will be further provided by the Government in separate implementing regulations.

In the case of emergency and urgent work, PR No. 20/2018 allows an employer to obtain the RPTKA after commencement of the work (but in any case, no later than 2 (two) working days after the relevant TKA starts his/her work).

Furthermore, PR No. 20/2018 also shows improvement in terms of timing. It mandates the MOM to issue the RPTKA approval within 2 (two) days (or in the case of emergency and urgent work, within 1 (one) working day).

Possibility of Dual Positions in Two Different Companies

Another crucial stipulation in PR No. 20/2018 is that it explicitly allows a TKA to serve dual positions in two different companies, provided that the two companies fall into a particular sector and that the TKA serves the same position and is hired for the same employment period. The particular types of positions, sectors and procedures for the purpose of this provision will be further regulated in a separate implementing regulation issued by the MOM. This provision shows a dramatic change to the previous regulation, which imposes a prohibition against dual positions by a TKA in two different companies (except for the position of a director or a commissioner).

BPJS Participation

Under the existing regulation, an employee may independently enrol in the Manpower Social Insurance Administration Organization (BPJS Ketenagakerjaan) if his/her employer fails to do so. In contrast, PR No. 20/2018 strictly requires the employer to register its TKAs for BPJS Ketenagakerjaan and/or an Indonesian insurance company (applicable to TKAs who will be working for more than 6 (six) months in Indonesia).

Other Notable Changes

Matters PR No. 72/2014 PR No. 20/2018

of the RPTKA

5 years, extendable Valid as long as the TKA remains in employment
Indonesian Language Training Not required Required
Periodical Reporting Semi-annually Annually

Transitional Provisions

Any RPTKA or TKA’s permit issued before the operation of PR No. 20/2018 will remain valid.


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