Updated: Jun 1, 2020
If you think you can employ foreigners in Indonesia, you need to be considerate of their position in the company. While you may hire them and be their sponsor to come and work in Indonesia, you need to be aware of their existence in your company. Foreigners are allowed to hold positions where Indonesian are not available or do not meet the requirements to do the job and subject to the conditions that such positions are open for foreigners. Foreigners can be employed in Indonesia only for specific positions and certain working period. An Indonesian company may employ foreigners, but they would need to comply with the regulations that were streamlined by the Ministry of Manpower and the Ministry of Law and Human Rights.
Any concerns before employing foreigners?
In 2018, the new regulation was imposed upon foreign workers in Indonesia. Critical points in Presidential Regulation No. 20 of 2018 on the Use of Foreign Workers in Indonesia (see here) are as follows:
Each company in Indonesia that wants to hire a foreign worker should first check whether the position can be filled by an Indonesian national before deciding to hire a skilled foreign worker.
Foreign workers cannot work in the human resources department of a company and/or other jobs that have been determined by the government (see attached list).
The Expatriate Placement Plan (RPTKA) is no longer mandatory for the following types of foreign worker: (1) foreign shareholders who also work as director or commissioner in a company in Indonesia, (2) diplomatic or consular officers, (3) foreign workers in jobs that are needed by the Indonesian government. It implies that these types of foreign worker can directly apply for a work permit (in Indonesian called as Izin Mempekerjakan Tenaga Kerja Asing/IMTA) at the Ministry of Manpower.
Those who want to employ a foreign worker need to present all data of the foreign worker to the relevant ministry or government official.
Every foreign worker in Indonesia requires a VITAS. This VITAS is requested by the employer or the foreign worker at the Ministry of Law and Human Rights.
The stay permit of the foreign worker has a maximum duration of two years but can be extended in line with existing regulations.
Every employer is required to register the foreign worker in the Manpower Social Security (in Indonesian called BPJS Ketenagakerjaan) in case they work in Indonesia for more than six months. However, they can also opt for similar insurance from an Indonesia-based insurance company.
The Indonesian Ministry of Manpower has issued MOM Regulation No. 10 of 2018 on Procedures for the Utilization of Foreign Workers, which implements Presidential Regulation Number 20 of 2018 on the Utilization of Foreign Workers. It stipulates requirements for foreign workers to be employed in Indonesia, including the obligation to:
hold appropriate education qualifications for the position they will fill;
hold a certificate of their competency or have at least five years of relevant work experience;
transfer their expertise to their Indonesian companion employee;
hold an Indonesian taxpayer registration number (in Indonesian called as Nomor Pokok Wajib Pajak/NPWP), for expatriates who have worked in Indonesia for at least six months; and
hold a temporary stay permit/card issued by the relevant institution.
What restrictions on the position of foreigners in the company?
The list of certain positions that allowed for foreigners in 18 sectors are listed in Ministerial Decree of Manpower Number 228 Year 2019.
Based on Ministerial Decree Manpower and Transmigration Number 40 Year 2012, there are 19 positions that not allowed for foreigners in Indonesia:
1. Direktur Personalia (Personnel Director)
2. Manajer Hubungan Industrial (Industrial Relation Manager)
3. Manajer Personalia (Human Resource Manager)
4. Supervisor Pengembangan Personalia (Personnel Development Supervisor)
5. Supervisor Perekrutan Personalia (Personnel Recruitment Supervisor)
6. Supervisor Penempatan Personalia (Personnel Placement Supervisor)
7. Supervisor Pembinaan Karir Pegawai (Employee Career Development Supervisor)
8. Penata Usaha Personalia (Personnel Declare Administrator)
9. Kepala Eksekutif Kantor (Chief Executive Officer)
10. Ahli Pengembangan Personalia dan Karir (Personnel and Careers Specialist)
11. Spesialis Personalia (Personnel Specialist)
12. Penasihat Karir (Career Advisor)
13. Penasihat Tenaga Kerja (Job Advisor)
14. Pembimbing dan Konseling Jabatan (Job Advisor and Counseling)
15. Perantara Tenaga Kerja (Employee Mediator)
16. Pengadministrasi Pelatihan Pegawai (Job Training Administrator)
17. Pewawancara Pegawai (Job Interviewer)
18. Analis Jabatan (Job Analyst)
19. Penyelenggara Keselamatan Kerja Pegawai (Occupational Safety Specialist)
Why foreigners cannot be employed in Human Resource?
The abovementioned decree was issued as an implementing regulation for Ministry of Labor Regulation No. 10 of 2018, aimed to attract highly-skilled foreign employees into Indonesia. This regulation was also designed to provide greater convenience for local employers – previous regulations regarding foreign workers were scattered across individual sectors.
The regulation was created in order to develop local Indonesian expertise in the human development field. Some people believe that the familiarity and sensitivity of Indonesian nationals in dealing with local employees in a manner consistent with local cultural norms cannot be undertaken by foreigners. However, by means of this regulation, the government want to make sure that there is nothing like foreign workers “stealing” jobs from Indonesians. In fact, it is hoped that such a regulation would lead to a rising trend of direct foreign investment in the country and create more employment opportunities for the locals. Besides, it is also hoped that the quality of the local human resources will be increasing along with the presence of skilled foreign employees who pass their knowledge to the locals.
If you have any questions or would like to know more, please contact us here.
SSEK Indonesian Legal Consultants, https://www.ssek.com/blog/the-effect-of-decree-40-foreigners-are-banned-from-the-human-resources-arena-in-indonesia