May 2018

Tax Alert

New regulation on foreign

manpower utilization under
presidential regulation number
20 of 2018

Summary

The Government of Indonesia has issued Presidential Regulation Number 20 of

2018 regarding Foreign Manpower Utilization. This new regulation is effective
as of 29 June 2018 and revokes the Presidential Regulation Number 72 of
2014 on the same subject.

Under the new regulation, there are significant changes with respect to the
requirements of foreign manpower utilization. These changes need to be
carefully considered by the sponsoring companies in Indonesia.

Background

The new regulation has amendments in the following areas:

a. The Foreign Manpower Utilization Plan (Rencana Penggunaan Tenaga

Kerja Asing or “RPTKA”), a license to employ foreign workers, is granted
within two (2) days of receipt of the complete application by the relevant
official at the Ministry of Manpower.

b. The RPTKA is no longer required for a shareholder with position as a

member of a Board of Directors or Board of Commissioners; a diplomatic
or consular officer at an embassy; and an employee of a government
department designated by the relevant minister.

c. For urgent work and emergencies, the RPTKA application can be made
up to two (2) days from the time the foreign worker is to commence
employment. In such cases, the RPTKA will be issued within one (1) day of
receipt of the complete application.

New regulation on manpower utilization including education and training under presidential regulation number 20 of 2018 |1
 d. Foreigners employed in social or religious work and in certain positions in educational institutions
are not required to pay the Foreign Manpower Utilization Compensation Fund Levy (Dana
Kompensasi Penggunaan Tenaga Kerja Asing – “DKPTKA”).

e. The Work Permit (Izin Mempekerjakan Tenaga Kerja Asing or “IMTA”) will no longer be
required. Companies will, however, still need to notify the Ministry of Manpower (MoM) of the
intention to use foreign workers and subsequently pay the DKPTKA. The MoM will then send the
notification to the Directorate General of Immigration (DGI) for purposes of visa processing.

f. All foreign workers are required to obtain a Limited Stay Visa (Visa Tinggal Terbatas or
“Vitas”) and a Limited Stay Permit (Izin Tinggal Terbatas or “Itas”).

g. Application for Vitas and Itas can be made either to the minister at the Ministry of Law and
Human Rights or directly to the appointed immigration official at the Indonesian embassy/
consulate overseas representing the Directorate General of Immigration.

h. Itas approval will be granted to the foreign worker upon arrival at the Immigration Check Point,
i.e. the airport in Indonesia. For the foreigner, the Itas will serve as both permission to stay and
permission to work.

i. Employers in certain sector may employ foreigners working for other employers in the same
position. The employment duration of the foreign worker cannot exceed that agreed under the
terms of employment with the original employer. The types of positions, sectors and procedures
for this will be governed further by ministerial regulation.

j. The Presidential Regulation will be effective within three (3) months of the date of its enactment,
i.e. 29 June 2018. There will be further implementing regulations issued by the relevant
authorities, i.e. the Ministry of Manpower and the Ministry of Law and Human Rights.

Henry Tambingon
Executive Director henry.tambingon@id.ey.com
Indonesia Tax services +62 21 5289 5033

Yudyanti E Gunadirdja
Senior Manager yudyanti.e.gunadirdja@id.ey.com
For further information:

Indonesia Tax services +62 21 5289 5161

Aris Prasetiyo
Manager aris.prasetiyo@id.ey.com
Indonesia Tax services +62 21 5289 5067

Sri Widyasari
Manager sri.widyasari@id.ey.com
Indonesia Tax services +62 21 5289 5379

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