New Regulation on the Use of Foreign Workers

The regulation introduced the simplification of the bureaucratic process in securing documentation for foreign workers

By Gilang Ardana
Friday, May 18, 2018

President Joko Widodo has signed a presidential regulation to ease the bureaucratic process on the use of foreign workers in Indonesia. The Presidential Regulation No. 20 of 2018 (PP20/2018), which was signed on March 26, 2018, abolishing the requirement for workers to have Foreign Workers Recruitment Permits (IMTA) by merging it with Foreign Worker Recruitment Plans (RPTKA).

PP 20/2018 is to invalidate the previous Presidential Regulation (PP 72/2014) on the same topic. The two implementing regulations, Ministry of Manpower (MoM) Regulation 35/2012 and its amendment (MoM Regulation 12/2013), are still valid, as long as their provisions are NOT contradictory to the provisions set out in this new regulation.

Below is the summary of the contradictory points taken from the implementing regulations, which, according to Article 38 of the current regulation, are deemed invalid.

  • The new regulation provides greater clarity and simplification from previous Presidential Regulation (PP 72/2014) and the relevant implementing regulations.
  • The new regulation emphasizes the consideration of market conditions in hiring foreign worker, while under PP 72, such consideration is to be made only when updating RPTKA.
  • Under PP 72, technical recommendation was a requirement for RPTKA. While the new regulation does not require one, it does say, “in case that the technical ministries or agency requires competency or qualifications, or prohibit the use of foreign worker for a specific position, those head of agencies or ministries are to inform Minister of Manpower those requirements to be approved”  (Article 5).
  • There is no more IMTA under the new regulation, but there is an added step (ie, submission of foreign worker information) in the process, which is placed after the RPTKA is approved.
  • Under the new regulation, RPTKA is the only formal document that will be issued by the Ministry of Manpower, which, after being approved, has similar legal standing as IMTA under the previous regulation (abolished under new regulation).
  • It used to take six days in total (three days for RPTKA and three days for IMTA) for a foreign worker to be able to apply for VITAS/ITAS. Under the new regulation, it takes four days for them to obtain an approved RPTKA.
  • Under the previous regulation, employers needed to report the implementation of the use of foreign workers once in between three and six months. Under the new regulation, the reporting is required to be done only once a year.
  • Under the new regulation, RPTKA is not required anymore for the following three types of employment:
    • Shareholders who are members of board of commissioner, or executives, diplomatic and consular staff, and foreign workers for other job types that are required by the government.
    • Foreign workers hired under emergency and/or urgent conditions: now it is specified that the RPTKA has to be submitted two days after the foreign workers started working, while there was no specification regarding this in the previous regulation.
    • Temporary positions: RPTKA was valid for a maximum of six months in the past, but under the new regulation, it is valid for a maximum of one month.
    • In the previous regulation, RPTKA was valid for a maximum of five years, and IMTA had to be updated every one to two years. Under the new regulation, RPTKA is valid for the duration of the employment contract.
    • Under the new regulation, the RPTKA form is simplified. The only information required in the form includes the justification for hiring the foreign worker, the position to be filled, the duration of employment, and the accompanying TKI. There is also simplification of RPTKA required documents. Those no longer required include letter of domicile, NPWP, and proof of compulsory reporting (bukti wajib lapor).
    • Under the new regulation, employers are not required to update RPTKA when there are changes in location, nationality, and total numbers of foreign workers, although employers are still required to update RPTKA when there is an additional number of foreign workers hired.
    • Under the new regulation, foreign workers are allowed to be employed by other employers, provided that it is for the same position and within the duration of the contract of employment with the first employer.

The regulation will come into force on June 29, 2018.

Usage of the AmCham Indonesia website states your compliance of our Terms of Use