OVERVIEW

With Indonesia’s participation in the WTO and other regional Free Trade Agreements, the nationn now enjoys the benefits of the global free trade system, as evident in the many Indonesians who now have greater access to foreign goods, services, and investment opportunities. On the counter side, these benefits are accompanied by a development resented by nationalist, namely an increase of foreign workers in Indonesia.

The objection to this increase is a fear that they will take away employment opportunities for Indonesians regardless of the fact that the majority of foreigners in Indonesia bring important skills and knowledge to Indonesia that are often not readily available here, and who through interaction with Indonesian workers contribute to the development of critical skills and knowledge essential for Indonesian to compete in a global economy.

Despite the benefits of having foreign workers, to address the domestic concerns, the Government is moving towards tightening legislation on the employment of foreign workers to ensure that only highly competent individuals will work in Indonesia. Statistically this policy has resulted in a decline of foreigners working in Indonesia from January 2011 to August last year from 77,144 to 57,826 foreign workers, and in the period from January to August 2013 a further decline to 48,002.[1]

The regulatory framework covering foreign workers in Indonesia can be divided into the two aspects, of immigration and employment. Legislation on immigration is provided under Law No. 6 of 2011on Immigration,[2] and its implementation regulation, Government Regulation No. 31 of 2013.[3] Employment matters are legislated under Law No. 13 of 2003on Labor Affairs (“Labor Law”) and various government and ministerial regulations.

This edition of Indonesian Law Digest (“ILD”) will highlight the key provisions applicable to employing foreign workers in Indonesia from an employment regulatory perspective. To this end, this ILD will discuss the following:

1.	General procedures for recruiting foreign workers;
2.	Specific provisions in recruiting foreign worker in several sectors, including: oil and gas; the banking industry; non-bank financial services; legal services; and the health industry;
3.	Remuneration of foreign workers; and
4.	Occupations closed to foreign workers.

 

PROCEDURES FOR RECRUITING FOREING WORKER IN GENERAL

The general procedures and requirements for recruiting foreign workers are set out in Minister of Labor and Transmigration (“Minister of Labor”) Regulation No. 12 of 2013 on Procedures for Recruiting Foreign Workers (“ 12/2013 Regulation”). The 12/2013 Regulation incorporates two important components in the recruitment of foreign workers that apply to all sectors, namely:

a.	Formal requirements for foreign workers; and
b.	Documents and permits that must be secured by employers, namely: Foreign Worker Recruitment Plan (Rencana Penggunaan Tenaga Kerja Asing – “RPTKA”). Visa Approval Recommendation; and Foreign Worker Recruitment Permit (Izin Memperkerjakan Tenaga Kerja Asing – “IMTA”).

Additionally, every business that wishes to employ foreign workers must pay a compensation fee to the Minister of Laborpursuant to Government Regulation No. 65 of 2012on Types and Tariffs of Non-Tax State Revenues Applicable to the Ministry of Labor and Transmigration (“Compensation Regulation”).

Formal Requirements for Employing Foreign Workers

Businesses may only hire foreign workers that satisfy the following requirements:[4]

a.	Have educational qualifications suitable for the intended position;
b.	Possess relevant competence, supported by competency certificates or have at least five years’ work experience relevant to the position;
c.	Provide a written declaration of willingness to transfer their skills and knowledge to fellow Indonesian workers; and
d.	Are able to communicate in Indonesian.

Excluded from the abovementioned requirements are foreign workers hired as members of a company’s board of commissioners, board of directors, workers in the entertainment and tourism service industries (usaha jasa impresariat)[5], or positions that are temporary in nature.[6]

Approval of Foreign Worker Recruitment Plan (RPTKA)

A business intending to employ foreign workers must have its RPTKAapprovedby the Director General of Labor Placement Oversight (“Directorate General”) via the Director of Oversight of Foreign Worker Employment (“Director”). To secure an approval, an employer must submit the prescribed application to the Director including the following documents:[7]

a.	Statement of reasons for employing foreign worker(s);
b.	Complete RPTKA form as provided in Appendix 1a of the 12/2013 Regulation;
c.	Business license;
d.	Company’s Deed of Incorporation (Akta Pendirian);
e.	Details of company’s structure;
f.	Appointment letter for an Indonesian colleague worker to work with the foreign worker, including the companion work plan;
g.	Statement letter declaring competency in providing training or other educational courses to Indonesian workers in accordance with the qualifications that are required for the position;
h.	Copy of a valid workers compulsory reporting certificate pursuant to Law No. 7 of 1981 on Compulsory Reporting for Laborat Companies; and
i.	Recommendation from a technical agency for employing foreign worker(s) (if required).

Upon receiving a completed RPTKA application, the Director will undertake a feasibility assessment and decide whether to approve or reject the application. If the application is approved, the Director must issue an RPTKA approval within 4 business days of the feasibility assessment being completed.[8]

An RPTKA is valid for a maximum of 5 years and may be extended for the same period but with due consideration to the then domestic employment market.[9]

RPTKA Extension

Applications to extend an RPTKA are to be submitted to the following authorities:[10]

a.	Directorate General or Director, if the RPTKA incorporates a plan to recruit foreign worker(s) that will work across provinces; or
b.	Head of the Regional Labor office if the RPTKA incorporates a plan to recruit foreign worker(s) to work in one province.

Amending RPTKA

Employers may amend the information set out in their RPTKA with respect to:[11]

a.	Company’s address and name;
b.	Position of the foreign worker;
c.	Place of work;
d.	Number of foreign workers; and
e.	Changes to citizenship of foreign worker(s).

Application to amend an RPTKA must be submitted to the Director General or Director before expiry of the original RPTKA. [12]

Visa Approval Recommendation Letter

Employers are required to obtain a visa approval recommendation (TA-01) for the foreign worker. This application must be made to the Director and include the following documents:[13]

a.	Copy of PRTKA approval;
b.	Copy of passport of the foreign worker;
c.	Curriculum vitae of the foreign worker;
d.	Copy of bachelor degree certificate or proof of working experience or competency certificate of the foreign worker related to the occupation;
e.	Copy of appointment letter of the Indonesian worker who will work with the foreign worker; and
f.	Photo of the foreign worker.

Once all documents are submitted, the Director will issue a visa approval recommendation letter copied to the Director of Immigration Traffic, Director General of Immigration, as well as the applicant.[14]

A visa approval recommendation is not required for a foreign worker married to an Indonesian citizen.[15]

Fee for Employing Foreign Workers

When employing foreign workers, employers must pay USD 100 monthly for every foreign worker they hire, pursuant to the Appendix of Government Regulation No. 65 of 2012on Types and Tariffs of Non-Tax State Revenues Applicable in Ministry of Labor and Transmigration (“Compensation Regulation”).[16]

Employers that fail to make this payment may be subject to administrative sanctions, such as warnings, business activity restrictions and suspension, partial or full temporary suspension of production, and permit revocation.[17]

Foreign Worker Recruitment Permit

Upon receiving a visa approval recommendation, an employer must submit an IMTA application to the Directorate General with the following documents;[18]

a.	Copy of employment contract;
b.	Proof of compensation payment to the Minister of Laborvia appointed bank;
c.	Copy of foreign worker’s insurance policy;
d.	Copy of visa approval recommendation; and
e.	Photo of the foreign worker.

The Director will issue the IMTA within 4 days of receiving a complete application.[19] IMTA validity follows the employer’s RPTKA validity. An IMTA extension may only be given for a maximum of 1 year. The IMTA extension process is similar to the RPTKA extension process.[20]

Temporary Work Permits

Employers may hire foreign workers on a temporary basis to undertake the following work: a) project-based work; or b) work related to machinery installation, electricity, after sales services, and products at trial stages.[21]

Employers that wish to hire foreign workers on a temporary basis must undergo the same RPTKA application process as set out above. The difference between the RPTKA for temporary workers and non-temporary workers is the validity period. An RPTKA for a temporary position is valid for a maximum of 6 months and cannot be extended.[22]

 

SPECIFIC PROVISIONS FOR RECRUITING FOREIGN WORKERS IN SPECIFIC SECTORS

Besides the general provisions discussed above, employers in certain business sectors are also required to satisfy additional requirements prior to employing a foreign worker. Some of the requirements require employers is to secure a recommendation for RPTKA and IMTA from related authorities before applying for the RPTKA and IMTA approval to the Minister of Labor. Additionally, there are also further eligibility requirements that must be satisfied by foreign workers in specific profession.

Oil and Gas Industry

Specific provisions for recruiting foreign workers in the oil and gas sector are set out in two main regulations, namely:

a.	The Minister of Energy and Mineral Resources (“Minister of Energy”) Regulation No. 31 of 2013 on Provisions and Procedures for Utilizing Foreign Workers and the Development of Indonesian Workers in Oil and Gas Business Activities (“31/2013 Regulation”); and
b.	Minister of LaborDecree No. KEP.110/MEN/97 on Implementation of Immigrant Foreign Worker Utilization in the Energy and Mining Sector and, Oil and Gas Subsectors (“1997 Decree”).

Both regulations set out specific provisions on the following matters:

a.	Candidate requirements for foreign workers that may be recruited by oil and gas businesses;
b.	Procedures for obtaining RPTKA and IMTA’s recommendation from the Director General of Oil and Gas. These recommendations are requirements for securing RPTKA and IMTA approval from the Minister of Labor; and
c.	Procedures for securing work permits from the Minister of Laborcalled a “Foreign Worker Work Permit (Izin Kerja Warga Negara Asing Pendatang – “IKTA”).

Candidate Requirement

Oil and Gas businesses may only employ foreign workers that satisfy the following requirements:[23]

1.	Possess the appropriate educational qualifications;
2.	Have 5 years related work experience for the intended position;[24]
3.	Be aged between 30 to 55 years;[25]
4.	Be willing to transfer their knowledge and skills to Indonesian worker colleagues. For this requirement, the 31/213 Regulation requires every employed foreign worker be accompanied by one Indonesian worker during his or her term of employment;[26]
5.	Satisfy the working standard competencies for the intended position; and
6.	Be able to communicate in Indonesian.

RPTKA Recommendation

Before an oil and gas business can employ a foreign worker, they must first secure recommendations for RPTKA and IMTA from the Director General of Oil and Gas. These recommendations are requirements to obtain RPTAK and IMTA approval from the Minister of Labor.

An RPTKA recommendation is obtained by lodging an application to the Director General of Oil and Gas, along with the following documents:[27]

1.	A complete RPTKA recommendation application form signed by the board of directors of the applicant company;
2.	A brief description on the rationale for using a foreign worker;
3.	Details of the organizational structure of applicant company;
4.	Current data on Indonesian workers, and Indonesian worker employment plan;
5.	Plan for transfer of technology and development for the Indonesian workers;
6.	The applicants’ work program or a brief work plan;
7.	A reference letter for the RPTKA recommendation from the Special Works Unit for Upstream Oil and Gas Activities (Satuan Kerja Khusus Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi – SKK Migas) (for oil and gas contractors);
8.	Business license from the Minister of Energy (for downstream oil and gas businesses);
9.	A copy of the oil and gas contractor concession, downstream businesses work contract or Registration Certificate (Surat Keterangan Terdaftar) from the Directorate General of Oil and Gas (for auxiliary businesses).

The Director General has 10 (ten) days from receiving a complete application to issue an RPTKA recommendation. A RPTKA recommendation is valid for a maximum of 5 years and may be extended.[28] Once the RPTKA recommendation is secured, the applicant must apply for a RPTKA’s approval and submit the RPTKA recommendation to the Minister of Labor.[29]

IMTA Recommendation

After acquiring an RPTKA’s approval, employers must then apply for an IMTA recommendation. To this end, the RPTKA holder must submit a further application to the Director General of Oil and Gas with the following documents:[30]

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