Foreign worker regulations in Indonesia

This is focused on Government Regulation 34/2021 on the use of foreign manpower, including its implications for foreigners’ right to work in Indonesia in general.

Article 1, definitions:

• TKA (foreign manpower) is a foreigner who holds a visa for work (‘dengan maksud bekerja’)in Indonesia. Note: this is poorly drafted. The foreigner has a stay permit, not a visa.
• ‘Pemberi kerja TKA’ (PKTKA) is a body who ‘memperkerjakan’ TKA in return for money or other compensation. Both words are difficult to translate, a ‘pemberi kerja’ is an ‘employer’, but ‘pemberi kerja’ does not necessarily mean an employment relationship, and nor does ‘memperkerjakan’, which remains somewhat ambiguous as to the nature of the relationship between ‘Pemberi kerja’ and the TKA
• Companion manpower is an Indonesian manpower hired by the PKTKA who accompanies the TKA for improving technology and skill
• RPTKA is a plan to use a TKA in a certain position for a certain time.
• RPTKA Approval is the approval of RPTKA by the ministry.
• KEK is an area with defined borders that is a special economic zone.
• DKPTKA is a fee paid to the state or local area as compensation for using TKA

Article 2: A PKTKA must prioritise Indonesian workers, but can hire a foreigner if they cannot be found.

Article 3: PKTKA can be:

• government body, foreign country or international agency
• foreign representative office
• private foreign company with business in Indonesia
• PT or yayasan, formed in Indonesia, or registered foreign business body
• a social, religious, educational or cultural institution
• an impresario service business
• a business body as far as permitted in regulations

An individual cannot be a PKTKA

Article 4.

The positions allowed for TKA are defined by the ministry.

Article 5
PKTKA can use a TKA being used by another PKTKA in the same position as:

a) director/commissioner

b) in the vocational/vocational training sector, digital economy sector, as an oil and gas contractor, as laid out by ministerial regulations

This is allowed for the length of the RPTKA Approval

Article 6
Every PKTKA must have a RPTKA. If two PKTKA want to use the same TKA, they must both hold a RPTKA Approval.

Article 7,28–31
The PKTKA must train the local companion worker. They must also provide Indonesian language training to the foreigner.

This is not applicable to a director, commissioner, head of foreign representative office, nor to the supervisory roles in a yayasan, nor to work of a temporary nature.

The PKTKA must return the foreigner home after their work ends.

Article 8

The PKTKA must enrol the TKA in BPJS if working more than 6 months, and private accident insurance if less than 6 months.

Article 9, 10

Individuals cannot be PKTKA. TKA cannot have two roles in the same company.

Article 11

PKTKA cannot use TKA in personnel positions as defined by the ministry.

Article 12

Specific requirements for application for RPTKA Approval.

Article 13-15

The ministry checks the suitability/qualifications of the TKA, but not in cases of Indonesian/foreign/local government

Article 16–17

RPTKA is defined as:
a) temporary for 0–6 months, and non extensible
b) 6 months — 2 years either DKPTKA or non-DKPTKA, and extensible
c) KEK — up to 5 years and extensible, or indefinite in the case of directors/commissioners

Article 18,25

Non-DKPTKA is given to government, foreign countries, international institutions, social, religious institutions and certain positions defined by the ministry in educational institutions

Article 19

RPTKA approval is not required for:

• directors/commissioners with a certain shareholding (1 billion, see 2019 regulations)
• shareholders with a certain shareholding (1.125 billion in 2019 regulations) [this is a red herring, as shareholding is not working, so should not be mentioned here — these people get an immigration facility to allow them to reside in Indonesia on the basis of their investment, but they of course do not need RPTKA approval, and it is confusing to mention it here.]
• diplomatic/consular staff
• for staff needed in emergency due to production shut-down
• technology start-ups and vocations, for no longer than 3 months, as defined by the Ministry; these TKA must have their data sent electronically to the ministry, which then forms the recommendation for the issue of a visa/stay permit for work. If the work exceeds 3 months, they can apply before the end of 3 months for full RPTKA Approval.
• business visits
• studies for a certain period

Article 21–22— extensions, changes to the RPTKA

Article 23 — details for paying DKPTKA

Article 24 — DKPTKA is PNBP (central-government revenue) for work in a KEK or in multiple provinces, or at the level of province/kota/kabupaten otherwise as appropriate

Article 32 — required to report annually on use of TKA, training of local companion, or after the end of the work of temporary workers

Article 36–42 — fines/sanctions for PKTKA failing to follow the law about RPTKA, training, etc.

Article 47 — local regulations on the payment of levies that don’t comply with the law, which is effective 1 April 2021, must be revised by 1 July 2021.

Issues

• Uncompensated voluntary work is entirely outside the scope, i.e. cannot possibly be subject to a ‘work permit’, since it only applies to work for reward.
• The regulation (as with its predecessor) makes foreign directors & commissioners within its scope. This is despite the fact that these people are not in an employment relationship with the company, and under international treaties are not considered employees. The provisions are relatively clear — company directors are required to have work ITAS and RPTKA unless they have a sufficient shareholding.
• There is an unnecessary inconsistency between the phrase ‘dengan maksud bekerja’ and the way it is is used in immigration law ‘dalam rangka bekerja’. C311/C312 are the visas ‘dalam rangka bekerja’, while C313/C314 (foreign investment), C317 (family reunion), and C318 (repatriation), as well as C315,C316,C319 are ‘tidak dalam rangka bekerja’.
• There is some not-entirely-helpful clarification of the law, which creates further inconsistencies, originating from the fact that ‘TKA’ is poorly drafted in the superior law on Manpower (13/2003), which the omnibus law did not change. The definition of TKA is ‘a foreigner who holds a work ITAS/ITAP’, not a ‘foreigner who works’. A clearer definition would be ‘a TKA is a foreigner who works in Indonesia. A TKA requires a RPTKA except as provided in law.’
  This creates various grey areas, in that individuals cannot hire TKA, but any foreigner who does not hold a work ITAS/ITAP cannot possibly be a TKA, so the question of an individual not being allowed to hire one becomes slightly confused.
  The further enumeration of business visits as an activity not requiring RPTKA was already clear from immigration law, but tends in this context to imply that a TKA is any foreigner who works in any way other than as allowed here…. (Or it could just mean that someone thought it was helpful to clarify that which was in reality already clear…)
• The fundamental problem with this is that immigration law (which is a superior regulation) gives repatriation (former Indonesian) and family reunion (spouse/child of Indonesian) ITAS/ITAP holders the right to ‘melakukan pekerjaan dan/atau usaha’ (to carry out a livelihood or a business). This wording does not match well with the wording used in manpower regulations, in that ‘pekerjaan’ does not imply a ‘mempekerjakan’-‘bekerja’ relationship, but is instead a more passive noun similar to ‘profession’ or ‘trade’. In this context, someone whose ‘pekerjaan’ is selling fried snacks on the street would not be object of the verb ‘mempekerjakan’, in that they are selling goods. Similarly in the case of a mobile phone repair service, the owner is a businessman who performs a service according to a tariff. He is not fundamentally ‘being hired’, but instead ‘selling a service’. Of course, it is not all that useful to speculate about the differences between various word meanings when there is no evidence that the words were carefully chosen in the first place, but at least we can see that there is some way for two sets of laws to be reconciled with each other. (Note, in 2015 there was a confusing set of examples given out by Manpower Bali, which focused on an Indonesian spouse providing a legal shield behind which a foreigner could work. These examples are unclear and do not take into account the fact that an ex-Indonesian has the same right to ‘work’, nor do they take into account issues such as divorce and death of the Indonesian spouse.)

My best reading of the law as it is interpreted (which is different from how it is written) is:

• you need a RPTKA to hire a foreigner, or to have them as a director, except for a director of their own company on the relevant investment ITAS/ITAP, and except for certain short-term cases (emergency work, business visits).
• even though the law says TKA is a foreigner on a work ITAS/ITAP, the definition should be ‘a TKA is a foreigner who is hired. They must have an RPTKA, except for activities that don’t require one. They can be on a family reunion, work or repatriation ITAS/ITAP’.
• some references have been made by ministers (Luhut) to foreigners working ‘from Bali’, which suggests that working for a foreign company might be ‘overlooked’, even though in practise permanent establishment rules might result in the foreign company effectively being in Indonesia.
• manpower have said foreigners can work informally via their spouse. For example, if the Indonesian spouse makes a contract to build a website, and the foreign spouse does the work at home, then that’s ok. This argument is not entirely logical in that if a foreigner needs a RPTKA in order to work then the spouse doesn’t really change that fact— the foreigner is doing all the work to make the website, and the Indonesian spouse is clueless. It is more logical if the foreigner is themself a ‘usaha perseorangan’, though here you likely also run into foreign investment rules.