Indonesia’s Omnibus Law: New Regulation to Ease the Hiring of Foreign Workers


Posted: 26th March 2021 14:24

In our second article of the Indonesia Omnibus Law series, we review the new implementing Government Regulation No. 34 of 2021 (GR 34/2021), which aims to ease the process of hiring foreign workers in Indonesia. GR 34/2021 repeals Presidential Regulation No. 20 of 2018.

GR 34/2021 introduces different categories for the Foreign Worker Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or RPTKA) and stipulates that applicants will now be required to submit specific documents to the Ministry of Manpower (MoM).

In addition, the government has eased the employment licensing process for tech-based startups seeking to hire foreign workers by waiving the RPTKA requirement, for no more than three months. There are also RPTKA exceptions for diplomatic and consular officers as well as directors or commissioners who are shareholders.

Indonesia’s government has lauded the Omnibus Law as the country’s most comprehensive economic reform, with more than 90 percent of the law aimed at stimulating domestic and foreign investments through the removal of bureaucratic inefficiencies. To read our first article in the series — the positive investment list — please click here.

RPTKA Categories

GR 34/2021 has introduced new categories of RPTKA authorizations. Obtaining an RPTKA is the first step towards accessing a work permit in Indonesia.

An RPTKA refers to the detailed employment plan of the foreign expatriate, such as their position and length of employment. This is submitted to the MoM for approval by the employer, after which the company can apply for the work permit.  

RPTKA-Categories

RPTKA Exceptions

The exceptions for RPTKA application apply to the following:

RPTKA Application Procedure

The employer will submit an application to the MoM stating their intention to hire a foreign employee (s) upon which the MoM will conduct a feasibility study.

The employer must provide the following documents and information to the foreign worker online application platform:

Information

Documents

Prior to the issuance of the RPTKA, employers will need to make a payment to the Foreign Worker Utilization Compensation Fund (Dana Kompensasi Penggunaan Tenaga Kerja Asing or DKP-TKA), which amounts to US$100. This amount is to be paid monthly to the MoM.

Administrative Sanctions

Employers that do not secure RPTKA approval or hire foreign workers in tech startups for more than three months can expect a fine, imposed per person, and on a monthly basis.

The temporary suspension of RPTKA authorization for employers can be imposed for those that fail to facilitate technology transfer or educational activities to Indonesian co-workers or those that fail to register and pay social security premiums. 

GR 34/2021 also clearly states that employers must not hire foreign workers to occupy two different positions in a single company.

Annual Reporting Obligations

Employers must submit an annual report to the MoM that covers the scope of the foreign worker’s employment, the education or training facilitated to Indonesian co-workers, and the types of technology transfer implemented.


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