Since the presidential era of Joko Widodo Indonesia has been working hard to entice foreign investors to come and open its business in the country. Reforms such as the implementation of a more streamlined bureaucratic process in the state institutions have been aggressively pursued to made it easier for foreign investors to do business in Indonesia.[1] Recently Indonesia has been inducted as a new member of BRICS, and Indonesia is also aiming to join the Organization for Economic Cooperation and Development (OECD).[2] With the membership into the above international economic organizations, Indonesia is set  to welcome more foreign investors setting up shop in the Country.

With the expected influx of arrivals of foreign investors in Indonesia then the influx of foreign workers rushing into the country will follow suit. Therefore this article is to provide the readers with the general idea of the employment of foreign workers to Indonesia.

1. General Information on Employment of Foreign Worker.
   The general law concerning manpower in Indonesia is stipulated by Law 13 of 2003 on Manpower (“Manpower Law”) as amended by Article 81 of Law 6 of 2023 on the Enactment of Regulation of the Government In Lieu of Law number 2 of 2022 on Work Creation Law (“Work Creation Law”). Under such law a Foreign Worker is defined as a foreign citizen visa holder with the intention to work in Indonesia.[3]  Under the prevailing Indonesian law foreign workers are allowed to work in Indonesia, however certain restrictions are implemented for the hiring of said foreign workers, as follows:[4]
   1. Employers who are individual persons are not allowed to hire or employ foreign workers. Therefore only employers in the form of entities (limited liability company, non-governmental organization, etc.) are allowed to hire foreign workers;
   2. Foreign workers can only be employed in Indonesia only for certain positions and for certain period of time and have the appropriate qualification for the position that will be held. This means that foreign workers are not allowed to be in the position of a permanent employee under an indefinite period employment agreement (Perjanjian Kerja Waktu Tidak Tertentu/PKWTT) and also need to be a highly skilled individual.
   3. Foreign workers are prohibited from occupying position that deals with personnel or human resource matters. Thus any position related to human resources such as human resource development/HRD cannot be occupied by foreign workers.
   4. Employers of foreign worker must have the foreign worker utilization plan (Rencana Penggunaan Tenaga Kerja Asing/”RPTKA”) legalized by the Minister of Manpower or its appointed official.

Aside from the above restriction, based on the amendment to Article 45 of the Manpower Law and Article 7 of the Government Regulation number 34 of 2021 on Recruitment of Foreign Worker (“GR 34/2021”), employers of foreign workers shall also adhere to the following conditions:

1. Appoint an Indonesian employee to serve as an accompanying employee/understudy employee for transfer of technology and transfer of expertise from the foreign worker to the local employee.
2. Carry out the education and job training for the accompanying employee/understudy employee in accordance with the qualifications for the position occupied by the foreign worker.
3. Return the foreign worker back to their country of origin after the employment term expires.
4. Facilitate the Indonesian language training and education for the foreign worker.

There are exceptions to the conditions of number 1 and 2 above for foreign workers employed under the following position:

• Member of the Board of Directors and Board of Commissioner;
• Head of a representative office;
• Advisors, administrators, and supervisors of a foundation; and
• Foreign workers employed for temporary work.

2. Employers of Foreign Workers.
   As explained in Part I concerning the restriction of foreign workers, it is known that foreign workers cannot be employed by individual employers. According to Article 3 of GR 34/2021 the following entities are allowed to employ foreign workers.
   1. Government agencies, representative of foreign countries, and international agencies.
   2. Foreign Trade Representative Office (Kantor Perwakilan Perdangangaun Perusahaan Asing/KP3A), Foreign Company Representative Office (Kantor Perwakilan Perusahaan Asing/KPPA), foreign news agencies operating in Indonesia.
   3. Foreign private companies operating in Indonesia.
   4. Legal entities in the form of Limited Liability Company (Perseroan Terbatas/PT) or Foundation (Yayasan), established under Indonesian law or foreign business entities registered with authorized agencies.
   5. Social, religious, educational, and cultural institutions.
   6. Impersario businesses (entertainment business).
   7. Other business entities, provided they are allowed by law to recruit foreign workers.
       
3. Qualification of Foreign Worker
   According to Article 4 of the Minister of Manpower Regulation number 8 of 2021 on the implementing regulation of the GR 34/2021, the requirement for a foreign worker to be able to be employed in Indonesia is as follows:
   1. Have the education in accordance with the qualification of the position that will be occupied.
   2. Have the competency or work experience for a minimum of 5 (five) years in accordance with qualifications of the position that will be occupied.
   3. Transfer their expertise to the accompanying employee/understudy employee.
       
4. Positions Open and Closed to Foreign Workers.
   The current regulation for the list of positions open or closed to foreign workers will refer to the following regulations:
   1. Decree of the Minister of Manpower number 349 of 2019 for the list of positions prohibited to be occupied by foreign workers; and
   2. Decree of the Minister of Manpower number 228 of 2019 for the list of positions that is allowed to be occupied by foreign workers.

It should be noted that the number of positions open to foreign workers is to numerous as it is divided into 18 sub categories and listing all of the said positions will take too much space to be discussed in this article. Whereas the list of positions prohibited will be the following:

5. Employer Application of the RPTKA
   One important aspect in employing a foreign worker is for the employer to apply for the RPTKA to the Minister of Manpower. The application for the RPTKA shall contain at least the following information:
   1. Identity of the foreign manpower;
   2. Reason for recruiting the foreign worker(s);
   3. Position or rank of the foreign worker in the company’s structure;
   4. Number of foreign workers;
   5. Period of foreign worker recruitment;
   6. Work location of the foreign worker;
   7. Identity of the foreign worker understudy employee/accompanying employee;
   8. Plan to absorb Indonesian workforce every year.

Whereas RPTKA is divided into the following categories based on the types of work required by the employer:

1. RPTKA for temporary work: validity 6 months and cannot be extended;
2. RPTKA for works more than 6 months: validity 2 years and can be extended for another 2 years;
3. RPTKA with non-compensation fund (employees from government institution, foreign dignitaries, international bodies, social institution, religious institution, certain positions in educational institution): validity 2 years and can be extended for another 2 years;
4. RPTKA KEK (Special Economic Zone) maximum of 5 years and can be extended for another 5 years for regular employees and for positions of Board of Directors and Board of Commissioner members shall be valid as long as the foreign worker is a member of such position.

6. Compensation Fund for Using Foreign Worker
   It should be noted that under Indonesian law employers must prioritize local or Indonesian workers. If for any reason an employer is forced to or decides to employ a foreign worker then the employer must pay for the compensation fund for the recruitment of foreign workers (Dana Kompensasi Penggunaan Tenaga Kerja Asing/”DKPTKA”) to the state as a non-tax revenue. The DKPTKA shall be paid for each foreign worker that will be employed prior to their arrival. Such payment shall be made during the application of the RPTKA and will become the requirement for the approval of the RPTKA. If the DKPTKA is not paid then the RPTKA will not be issued. The fee for the DKPTKA according to Article 35 of  the Minister of Manpower Regulation number 8 of 2021 is US$ 100 per position per month of employment. Please note that as mentioned in Part V there are positions where the RPTKA is not required, the position in question shall be for foreign workers working for the following institution:
   1. Government institution;
   2. Foreign dignitaries;
   3. International bodies;
   4. Social institutions;
   5. Religious institutions; and
   6. Certain positions in educational institutions.