Manpower in Indonesia: New Regulation on the Utilization of Expatriates

New Manpower Regulation on the Utilization of Expatriates

The government issued Law No. 11 of 2020 concerning Job Creation (“Omnibus Law“) in 2020. The Omnibus Law is expected to support the employment opportunity through increased investment. To further implement the Omnibus Law and to upgrade the previous regulation, on 2 February 2021 the government issued Government Regulation No. 34 of 2021 concerning the use of expatriates (“GR 34/2021“), which simultaneously replaces and revokes the Presidential Regulation No. 20 the Year 2018 of the Use of Expatriate (“PR 20/2018“).

In line with the efforts to increase national development, investment is one of the main strategies to encourage the national economic growth in order to be able to create an expansion of employment opportunities for Indonesian workers. This regulation is needed to encourage the acceleration of national development through restrictions on the use of expatriates. Therefore, GR 34/2021 regulates employers to be granted permits of using expatriates, among other government agencies along with representatives of foreign countries and international agencies. However, it is still required for every employer to prioritize Indonesian workers in all types of positions available. Hence, the government still prohibits expatriates from occupying positions related to personnel positions.

In the event of Employers being eager to employ expatriates in Indonesia, an employer shall obtain an Approval of Foreign Manpower Utilization Plan (“RPTKA Approval”). To obtain such an approval, employers must apply through the Minister of Manpower System (“Manpower System”). Pursuant to Article 7 GR 34/2021, apart from having to have RPTKA Approval above, employers are also required to appoint Indonesian citizens as expatriate companions, who are employed to transfer technology and skills from the expatriates, to conduct an education and job training for assistants in accordance with the qualifications of the position occupied by the expatriates, and to repatriate the expatriates to their countries of origin after the work agreement ends. Different from the Article 26 PP 20/2018, the provisions concerning repatriation were not previously regulated.

In GR 34/2021, employers are not required to have RPTKA Approval for employing; (i) Directors or commissioners with certain share ownership or shareholders in accordance with the provisions of laws and regulations, (ii) Diplomatic and consular staff at representative offices of foreign countries, and (iii) Expatriates that employers require to work in production activities that have been temporarily halted as a result of emergency conditions, to do vocational work, to work in technology-based start-up companies or to engage in business visits and/or research.

In the case of using expatriates for technology-based (start-up) and vocational business activities for a certain period of time, employers are required to submit data on prospective expatriates through the Manpower System. After submitting this data, the Minister of Manpower will determine the position of the expatriates after receiving input from the relevant Ministry, including recommendations for obtaining visas and residence permits, considering that according to Article 27 PP 34/2021, every expatriate who is working in Indonesia is required to have a residence permit. In the event that the use of the expatriate exceeds the period of 3 months, the employer is required to have RPTKA Approval.

Finally, the new provisions in this regulation are based on Article 36 GR 34/2021, which regulates the rules regarding sanctions related to violations committed in the use of expatriates. These sanctions consist of fines, suspension of the RPTKA Approval application processes, and RPTKA Approval revocations, whereas the previous regulation related to sanctions referred to the provisions stipulated in Law No. 13 Year 2003 of Manpower and Law no. 6 Year 2011 of Immigration, which can lead to fines and/or crimes.

GR 34/2021 aims to create a conducive investment climate to create ample employment opportunities for Indonesian workers in Indonesia, which will be one of the supporting aspects to strengthen the national economy and Indonesia’s competitiveness, and also to provide legal certainty in the form of administrative sanctions against violators of this regulation. GR 34/2021 comes into force on 1 April 2021.

By: Nadindra Arina

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