5 July, 2018
On 29 March 2018, the Indonesian government enacted Presidential Regulation No. 20 of 2018 regarding the Employment of Expatriate Workers (PR 20/2018). PR 20/2018 replaces the previous regulation regarding the employment of expatriate workers, Presidential Regulation No. 72 of 2014 (PR 72/2014). The new regulation, and its significant changes, came into effect on 29 June 2018.
Overview
There are several significant changes introduced under PR 20/2018, including:
- The removal of the need for an Expatriate Employment Permit (also known as Izin Memperkerjakan Tenaga Asing or IMTA). Now, the approval for the Expatriate Workers Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing – RPTKA) constitutes the permit to employ an expatriate.
- Employers are now required to facilitate Indonesian language training to expatriate employees, including those who occupy the position of director or commissioner.
Several of the changes introduced in PR 20/2108 will require an implementing regulations to be issued by the Minister of Manpower (MOM).
There has been no change to other key matters regarding the employment of expatriate employees, such as the requirements to:
- prioritise the employment of Indonesian citizens;
- engage Indonesian "Understudy Workers" with respect to each expatriate employee, to facilitate the transfer of technology and skills;
- implement education and training for Indonesian workers, with respect to the qualifications required to undertake the positions held by expatriate employees; and
- enrol expatriate workers employed for more than six months in relevant social security schemes.
Further, the prohibition on expatriate employees undertaking certain roles (including human resources positions) has been maintained. It is unclear if the relevant regulation setting out permitted positions for expatriates will be updated.
Significant Changes Under Regulation 20/2018
PR 20/2018 includes the following significant changes to PR 72/2014:
The full impact of these changes remains to be seen. However, employers of expatriate workers should be cogniscant of their upcoming implementation. Now is also a good time to undertake a "health check" of your expatriate arrangements in Indonesia.
Oentoeng Suria & Partners In Association With Ashurst.
For further information, please contact:
Daniel Reinbott, Partner, Ashurst
daniel.reinbott@ashurst.com
