New Details on Foreign Worker Regulation

AmCham seminar hears about the new simplifications but greater clarity still needed on implementation on the ground

By Gilang Ardana
Sunday, August 26, 2018

Indonesia’s latest foreign worker utilization regulation promises greater openness in the country’s manpower regime, however greater understanding is needed on how the regulation will be implemented.

Questions flooded from companies in a seminar organized by AmCham Indonesia and the Indonesian-French Chamber of Commerce and Industry (IFCCI) on August 21 to discuss the implementation of Presidential Regulation No. 20 of 2018 and Minister of Manpower Regulation No. 10 of 2018 on Foreign Worker Utilization.

Ratih Rullyanti, the Section Head of Integrated Services (PTSP) and Ali Chaidar, Section Head of the Directorate of Foreign Worker Utilization at the Ministry of Manpower were present to explain how employers should adapt to the changes.

How the new regulation works

The regulation abolished the requirement for a Foreign Worker Utilization Permit (IMTA) in the work permit issuance process. It also cut off the overall processing duration from six days to four days, as the entire process should be done online via tka-online.kemnaker.go.id/.

The regulation also introduces new obligations for employers to facilitate Bahasa Indonesia training for foreign employees and possible administrative sanctions for non-compliance. There are no testing requirements.

“One of the examples is to hire a teacher to teach Bahasa,” said Ali. “To be noted, the ministry is not going to regulate in more detail on how you should provide language training facilitation, however the employer should write a letter stating that they have done the program and include it in the annual report to the ministry.”

Recommendations from technical ministries also will no longer be required. However, all ministries will submit a “positive list” to the manpower ministry of every position that can be filled by foreign workers. The new regulation also allows dual occupation for board of commissioner members under one work permit, and this flexibility is also extended for foreign workers in the educational and vocational, oil and gas and financial technology sectors.

“However, approval from the first company is still needed,” Ali said.

Foreign Worker Utilization Planning (RPTKA) will be the main document for work permit issuance, and there are three types of RPTKA that employers need to be aware of:

  • Emergency RPTKA: for foreign workers employed to handle emergency situations. The RPTKA It is valid for one month and non-extendable. The arrangement of the RPTKA can be done two days after the foreign worker is employed.
  • Short-term RPTKA: for commercial film making; audits, product quality control and inspections for a period of more than one month; and the impresario or entertainment business. The RPTKA is valid for six months and non-extendable.
  • Long-term RPTKA:  for regular foreign workers, it is valid for the duration of employee’s contract.

However, obtaining an RPTKA is not the only thing on an employer’s to-do list. As the RPTKA will not contain the name of the foreign worker, the employer needs to inform the manpower ministry of the details of every foreign worker they employ through a process called “Notification”.

During Notification, the employer who has the approved RPTKA should submit the details of the foreign worker (personal details and qualification details like a university degree) and pay a levy (DKP-TKA) a day after the Notification application has been acknowledged and approved. The levy rate is $100/per-occupation/month/person, or $1200 a year.

The RPTKA will not be required for government agencies/institutions, representative offices of foreign countries, international organizations, and members of the board of directors or board of commissioners of a company. When asked what visa/work permit was required for a member of the board of directors who resides in Indonesia, Ratih said they require an investor visa.

“If he/she is the incoming person to the country, he/she needs to obtain an investor visa with BKPM’s [Indonesia Investment Coordinating Board] recommendation. If he/she is already in the country prior to the enactment of this regulation, he/she needs to consult with his/her immigration checkpoint to renew the visa.”

Companies also asked about the RPTKA, insurance and tax id requirements for regional managers who supervise several countries and occasionally visit Indonesia. 

“[For that case] we still need to have further discussions with our DG [Directorate General] team,” said Ali. He emphasized that the duration and frequency of the visits would pretty much determine the type of RPTKA needed.

Ratih and Ali also said the ministry is working with the DG of Immigration from the Ministry of Human Rights and Law to streamline the documentation process for both work permits and work visas.  Ali said companies could expect the integrated system to be finalized in November 2018.

Employer obligation

The new regulation also sets out obligations for employers including to appoint Indonesian workers as counterparts for every foreign worker employed for the purpose of the transfer of technology and knowledge. However, this requirement will not be applicable at director level.

To ensure compliance with the regulations and its obligations, Ratih and Ali said that there are administrative sanctions introduced in the new regulation.

  • Delay of overall work permit process: for employers who are have not included foreign workers in insurance and/or the national social security program; and not submitting annual reports of foreign worker utilization to the minister.
  • Temporary termination of the work permit process: for employers who fail to facilitate education and training of Bahasa; fail to appoint Indonesian counterparts; and have a legal and valid RPTKA.
  • Revocation of Notification: for employers who employ foreign workers in prohibited positions; and/or are unable to pay the levy.

Click here to download the socialization material from the seminar.

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