The President Regulation No. 20 of 2018 on the Employment of Foreign Workers/Expatriates

The Indonesian government asserts that in order to support the national economy and the expansion of employment opportunities through increased investment, it considers the importance to deregulate foreign migrant workers employment. Thus, on 26 March 2018, President Joko Widodo signed the Presidential Regulation No. 20 of 2018 on the Use of Foreign Migrant Workers. The writer asserts that most likely the Presidential Regulation is issued to align national regulations to the principle of ASEAN economic community which is liberating trade barrier and labour market within the ASEAN countries.

The Presidential Regulation states that foreign migrant workers can be employed for certain positions and at certain times, which is done with due regard to domestic labor market conditions. Further, employer of foreign migrant workers, according to this Presidential Regulation, shall prioritize Indonesian in all types of positions available. In the situation that positions in question cannot be occupied by Indonesian, they may be occupied by foreigners.

Limitation on the type of work or position that prohibited for foreign migrant workers is that they cannot hold any Human Resources position or certain work or level determined by Minister (of Manpower?). This restriction is stipulated in the Article 4 paragraph (1,2) of the respective Presidential Regulation.

The Presidential Regulation also stipulates that employers in certain sectors may employ foreign workers who are employed by another employer in the same position, no later than the expiry of the foreign workers employment period as stipulated in their initial employment agreement with the first employer. The type of position, sector, and procedures for the use of foreign workers as intended, according to this Presidential Regulation, shall be further stipulated by a Ministerial Regulation.

The Regulation also stipulates that employer must have RPTKA (Plan of Use of Foreign Workers) approved by the Minister (of Manpower) or appointed official, which at least include:

  1. reasons for the employment of foreign workers;
  2. position and /or level of foreign workers in the organizational structure of the company;
  3. duration of employment of foreign workers; and
  4. appointment of Indonesian workers as overseer of foreign workers.

However, employer is not required to issue RPTKA in situations where the foreign migrant is:

  1. shareholder who is a member of the Board of Directors or a member of the Board of Commissioners of the employer;
  2. diplomatic and consular officers to representatives of foreign countries; or
  3. conduct the type of work required by the government.

This is stipulated by Article 10 paragraph (1) of the Presidential Regulation.

For emergency and urgent work, according to this Presidential Regulation, employers may employ foreign workers by applying for RPTKA approval to the Ministry (of Manpower) or appointed official within 2 (two) working days after the expatriate start working. Furthermore, the approval of RPTKA shall be issued no later than 1 (one) working day after the application is received.

Of the tax and fee entails to the employment of foreign workers, the Presidential Regulation stipulates that employer shall pay compensation funds for the employment of foreign workers upon receipt of the (approval) notification, and shall be made through a bank appointed by the Minister, which is a Non-Tax State Revenue. Foreign workers should also pay income tax in accordance with Regulation of the Director General of Tax (DGT) Number Per – 43/PJ/2011.

Payment of compensation fund (and income tax) for the employment of foreign workers and the obligation to have RPTKA is not required for government agencies, foreign representatives, and international agencies that employ foreign workers.

Pepres No. 20 Tahun 2018

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