Knowing the Advantages of Perpres No. 20 of 2018 on Hiring Expatriates

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“The Presidential Regulation No. 20/2018, in general, has provided some advantages for the Employer in Indonesia who wants in hiring foreign workers. It consists of six  significant provisions, that are, (I) allowing Foreign Workers to have double position at the same time in certain job sector; (II) releasing the RPTKA for shareholder who holds director or commissioner position from the obligation to have RPTKA; (III)  allowing the Foreign Workers to conduct their job first, then arrange the RPTKA, for specific jobs; (IV) abolishing IMTA; (V) introducing new procedure of applying permit to employ foreign workers, which is shorter and more precise compared to previous regulation; (VI) more flexible reporting period of Expatriate utilization to the Ministry of Manpower.” 

The President of the Republic of Indonesia, Joko Widodo has enacted the Presidential Regulation No. 20 of 2018 on Foreign Workers (“Perpres No.20/2018”) on 26 March 2018. It will enter into force on 26 June 2018, three months after the enactment date.

In general, the Regulation introduces several significant changes to the procedures for hiring foreign workers in Indonesia – some of which may be considered beneficial to the companies who have an intention to hire foreign workers – compared to the previous regulation. The Government argued the enactment of Perpres No.20/2018 is to simplify the bureaucratic process as well as facilitating permits to encourage the ease of investment in Indonesia.

This article discusses some provisions in Perpres No. 20/2018 that are considered beneficial for the company in hiring foreign workers. It is written as a guideline and reference for the company or institution who has a plan to hire foreign workers in the future.

For the beginning, it should be borne in mind that the Perpres No.20/2018 has stated seven parties who can hire foreign workers in Indonesia. As described in Article 3, they are, as follows:

  1. The Government agency, the representative of the foreign country, international bodies, and the international organisation;
  2. The Foreign trade representative office, the representative office of the foreign company, and the foreign news agency that is conducting activities in Indonesia;
  3. The foreign private company that is doing business in Indonesia;
  4. The Indonesian legal entity in the form of Limited Liability Company or Foundation, or the foreign business entity that registered in the authorized institution;
  5. The institution that is conducting activities in social, religion, education and cultural;
  6. The Impresario service business; and
  7. The business entity that complies with the existing law.

 

Here are some beneficial provisions in Perpres No.20/2018 for the seven categories of parties above in employing foreign worker:

I. Double Position is Possible for Certain Condition

Article 6 of Perpres No.20/2018 allows employers of foreign workers in specific sectors to employ foreign workers who are employed by other employers in the same position. In other words, the article recognises the foreign worker to have double positions. The foreign worker could be employed the longest until the expiration of his or her working period as the contract of work with the first employer of the foreign worker.

Then, what sectors that allow foreign workers to provide double positions for foreign workers? In this regard, We have to wait for the issuance of ministerial regulations, as Article 6 paragraph (3) states that “The types of positions, sectors and procedures for the employ of foreign workers in double positions are further stipulated by Ministerial Regulation.”

II. RPTKA is Not Mandatory for Shareholder Who Holds Position as a Director or Commissioner

According to Article 10 Perpres No.20/2018, the Employer is not required to hold RPTKA (Rencana Penggunaan Tenaga Kerja Asing/ Expatriate Worker Utilization Plan) in employing foreign worker who is conducting as shareholders serving as director or commissioner. In addition, RPTKA is also not mandatory for the employer who employs diplomatic and consular employees as well as foreign worker in certain tyoe jobs that required by the Government. The explanation detail of “certain type of jobs tha required by the government” will be further regulated in Ministerial Regulation.

Moreover, the government agency, the representative of the foreign country, and international bodies are also included that are not required to have RPTKA in employing the foreign worker. It is mentioned explicitly in Article 16 paragraph (1) of Perpres No.20/2018.

III. Employing Foreign Worker First, Then Applying RPTKA

Article 13 of Perpres No.20/2018 provides permission for the employer to hire foreign workers in Indonesia first, and then it will apply for RPTKA later. It only applies exclusively to emergency and urgent work, and the application RPTKA should be submitted within maximum 2 (two) days after foreign worker works in Indonesia.

Unfortunately, Perpres No.20/2018 does not provide further explanation on the definition of emergency and urgent work.

IV. “Abolishing” IMTA

Perpres No. 20/2018 is no longer regulates explicitly IMTA (Izin Mempekerjakan Tenaga Kerja Asing/ Expatriate Working Permit Letter). Article 14 only mentions the existence of a notification for payment of compensation funds to be submitted by the Minister of Manpower after the employer provides personal data on foreign workers. Whereas, in the previous regulation, the compensation fund (known as DPKK, Mandatory Skill Development Fund) is paid at the time of submission of IMTA after obtaining the billing code from the Ministry of Manpower.

The obligation to pay compensation funds is also excluded for the government agency, the representative of the foreign country, and international bodies as well as institutions in conducting social and religious activities, and too certain occupations in the field of education.

V. The Shorter Timeframe

Similarly to previous regulation, the Perpres No. 20/2018 also describes clearly the period required by the employer in the arrangement of the Foreign Workers license. For example, for ratification of RPTKA and its amendment, the period requested is only 2 (two) days since the application file is received completely. In the previous regulation Ministry Regulation No. 16 of 2015 stated it takes 3 (three) working days in obtaining the RPTKA.

Meanwhile, for RPTKA which is emergency and urgent, RPTKA is valid for a maximum of 1 (one) working day since the application is received completely.

Furthermore, the notification of payment of compensation funds shall be issued within 2 (two) working days with a copy of the Directorate General of Immigration. Even so with the issuance of Vitas (Visa Izin Tinggal Terbatas/Limited Stay Visa), also conducted within a maximum of 2 (two) working days since the file received completely.

VI. More Flexible Reporting Period

Compare to the previous regulations, Employer’s obligation to report the implementation of the use of foreign worker to The Ministry of Manpower has been reduced from previously every 6 (six) months, become only once a year, that covering:

  1. The implementation of employing foreign workers;
  2. The implementation of education and training of co-worker.

In addition to arranging several provisions that are considered beneficial for the employer, the Perpres No. 20/2018 also provides several obligations for the employer that employs foreign workers includes the following:

  1. The obligation to facilitate education and training of Indonesian language education (Article 26 Paragraph (1) Letter c).
  2. The obligation to include foreign worker in the Employment Social Security (BPJS Employment) and / or Indonesian legal insurance policy for the foreign worker who has more than six months working period (Article 25).

It is the end of the article. Hopefully, it will keep yourself informed. Enjoy!

 

How Can Elson Help You?

ELSON Indonesia is a company that focus on providing comprehensive legal solution for expatriates, foreigner, and mixed marriage couple in Indonesia.

 

Contact us:

info@elson.co.id

(+62) 21 8067 4920 (office)

(+62) 819 3274 1 333 (hotline)

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Latifah graduated from Law Faculty of University of Indonesia majoring business law. She was one of the finalist outstanding graduate students on her batch in the faculty. After graduated, she gained a valuable experience by working for a law firm, corporate, and International organization in the legal field. As a senior associate at Elson, Latifah has an expertise in the area of business law, including expatriate work permit, employment law, company formation, corporate matters, drafting and review the agreement, etc. She also a member of PERADI (Indonesian Advocates Association