New Regulation Makes it Easier for Foreigners to Work in Indonesia
The government of Indonesia issued Presidential Regulation No. 20/2018 on the Use of Foreign Workers in Indonesia. This new regulation aims at simplifying the permit application process for foreign workers, hence making the process more efficient and faster. Among the key changes is that the previously mandatory Expatriate Placement Plan (in Indonesian: Rencana Penempatan Tenaga Kerja Asing, or RPTKA) has been removed in specific cases.
Hanif Dhakiri, Indonesian Minister of Manpower, is optimistic that a more efficient and simpler permit application process for foreign workers will result in rising foreign direct investment in the country. This will then also lead to more employment opportunities for the local population.
The minister explained that several issues have been simplified through the new regulation. Firstly, the Expatriate Placement Plan is not required anymore for those foreign workers who visit Indonesia for short periods. Secondly, the limited stay visa (in Indonesian: Visa Tinggal Terbatas/VITAS) and Limited Stay Permit (in Indonesian: Izin Tinggal Terbatas/ITAS) have been turned into one process. The consequence of such harmonization is that the VITAS can now be issued by the Indonesian Embassy in the foreign country as being the "long arm" of the Directorate General of Immigration. This should speed up the whole process. Moreover, the VITAS will need to be issued by the Embassy within two working days after receipt of the complete application.
Dhakiri emphasized that the Indonesian population need not worry about foreigners "stealing" jobs from Indonesians as those foreigners who will work in Indonesia need to have high qualifications/skills that are not readily available in Indonesia.
Darmin Nasution, Coordinating Minister of Economic Affairs added that in certain sectors the presence of skilled foreign workers is actually highly needed. For example in the e-commerce business. And as these skilled foreign workers will pass on their knowledge and skills to Indonesian staff-members, the quality of local human resources will improve as a result of the presence of the foreign worker.
The new regulation, which is set to come into effect per 29 June 2018, still contains a number of unclear policies that will be sorted out and streamlined by the Ministry of Manpower and the Ministry of Law and Human Rights.
Key points in Presidential Regulation No. 20/2018 on the Use of Foreign Workers in Indonesia:
• 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.
• The Expatriate Placement Plan 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: Izin Mempekerjakan Tenaga Kerja Asing, or 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.
• The relevant ministry or government official will only require a processing period for the foreign worker's data no longer than two working days.
• 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: BPJS Ketenagakerjaan) in case they work in Indonesia for more than six months. However, they can also opt for a similar insurance from an Indonesia-based insurance company.
Origin of Foreign Workers in Indonesia in 2016:
| Country | Number |
| China | 21,271 |
| Japan | 12,490 |
| South Korea | 8,424 |
| India | 5,509 |
| Malaysia | 4,138 |
| Philippines | 3,428 |
| USA | 2,812 |
| Australia | 2,483 |
| Thailand | 2,394 |
| Great Britain | 2,252 |
| Singapore | 1,748 |
| Others | 7,684 |
While the number of foreign workers in Indonesia showed a declining trend in between 2011 and 2014, a rebound occurred from 2015 onward with a particularly notable surge in 2017. This is presumably the result of big infrastructure projects awarded to foreign companies. For temporary construction work they sent a big number of foreign workers to Indonesia.
Number of Foreign Workers in Indonesia:
| 2011 |
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | |
| Foreign Workers |
77,307 | 72,427 | 68,957 | 68,782 | 69,025 | 74,183 | 126,000 |
Source: Kontan