The government of Indonesia issued Presidential Regulation No. 20/2018 on the Use of Foreign Workers in Indonesia. This new regulation aims at simplifying the permit application process for foreign workers, hence making the process more efficient and faster. Among the key changes is that the previously mandatory Expatriate Placement Plan (in Indonesian: Rencana Penempatan Tenaga Kerja Asing, or RPTKA) has been removed in specific cases.

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According to commercial real estate company Colliers International Indonesia, more expatriates are renting houses in Indonesia, specifically (South) Jakarta, since the second half of 2017. The rising number of expats who rent houses in Indonesia is due to expansion plans of manufacturing and automotive companies.

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The number of expat workers in Indonesia is declining due to persistently low commodity prices and the government's stricter regulations regarding the hiring of expats. In the first five months of 2016 a total of 72,399 temporary residential permits (including renewals) were issued to expats. It is highly unlikely that the number of expat workers in Indonesia this year will equal the total of 171,944 foreign workers that were active in Indonesia in 2015. Actually the number of expats working in Indonesia has already been on the decline since 2011 (when the commodity slowdown reemerged).

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With the implementation of the ASEAN Economic Community (AEC) per 1 January 2016 - i.e. the community that is designed to allow the free flow of goods, services, investment, and skilled labor as well as the freer flow of capital among its ten member countries - there has been concern among part of the Indonesian population whether there could occur a massive inflow of foreign workers into Indonesia hence giving rise to more competition on the domestic labor market. This column zooms in on the free flow of labor under the AEC.

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Beberapa minggu lalu, telah dilaporkan bahwa Presiden Indonesia Joko Widodo meminta Menteri Tenaga Kerja & Transmigrasi Hanif Dhakiri untuk merevisi draft peraturan (dibuat di tahun 2013) yang mengharuskan para ekspatriat lulus tes penguasaan Bahasa Indonesia sebagai persyaratan mendapatkan izin kerja. Menurut Widodo, peraturan ini akan mengurangi daya tarik iklim investasi Indonesia.

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On 26 July 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic subjects such Indonesia’s coal royalties, a July inflation update, the weak performance of Indonesian stocks and the rupiah, revised regulations regarding the position of foreign workers in Indonesia, and more.

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The number of expatriates working in Indonesia has declined in the last three years. Based on data from the Ministry of Manpower & Transmigration there were 68,957 expatriates working in Indonesia in 2013, a 4.8 percent decline from 2012. The main reason for this falling number is tighter government policy. Minister Muhaimin Iskandar stated that curtailing the influx of expats is one way of developing the country's human resources. Only when a foreigner has such exceptional qualities - not easily found in Indonesia - should he/she work in Indonesia.

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Expatriates working in Indonesia are referred to as foreign workers in Indonesian Law number 13 of 2003 regarding Manpower (Labor Law). A foreign worker is defined as a visa holder with foreign citizenship, who has the intention to perform work in Indonesia. Both expatriates working in Indonesia and the companies employing such expatriates are subject to permitting requirements and restrictions set by the Indonesian Government. In this column we provide an overview of the general licenses needed to employ foreign workers.

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