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06/09/2019

Manpower Ministry Issues Consolidated List of Roles that May be Filled by Expatriate Employees

 

A. Introduction

 

The Minister of Manpower (the “Minister”) has issued a new decree (Decree No. 228 of 2019 / “Decree 228,”[1] effective 27 August 2019) that sets out a consolidated, 138-page list of positions that may be filled by expatriates in Indonesia. The more than 2,200 job titles listed in Decree 228 are taken directly from the International Standard Classification of Occupations (ISCO) issued by the International Labour Organization (ILO), with the Bahasa Indonesia equivalents of these job titles being as set out in the Indonesian Standard Classification of Positions (Klasifikasi Baku Jabatan Indonesia / KBJI).

 

Decree 228 has been issued as an implementing regulation for Minister of Manpower Regulation No. 10 of 2018,[2] which introduced a number of significant changes to Indonesia’s expatriate employment regime.

 

For ABNR analyses of Regulation No. 10 of 2018, click here; the current situation as regards the expatriate-employment rules applicable to non-resident foreign directors and commissioners, click here; and the situation as regards shareholding directors and commissioners, click here.

 

B. Decree 228: Overview

 

1. From the regulatory clarity perspective, Decree 228 makes things easier for employers as it revokes a plethora of previous decrees that set out individual lists of prescribed positions that may be occupied by expatriates on a sector-by-sector basis. With the issuance of Decree 228, all prescribed positions across all business sectors are now listed in the same instrument, which should make it much simpler for prospective employers to identify whether expatriates may be employed in particular roles, and how their job titles and job descriptions should be formulated so as to comply with the specific roles that are listed.

 

Decree 228 covers all of the business / commercial sectors that are set out in the 2017 version of the Indonesian Standard Business Classifications (Klasifikasi Baku Lapangan Usaha Indonesia / KBLI[3]), namely:

 

a. Construction; b. Real Estate; c. Education; d. Manufacturing / processing; e. Water and wastewater management, waste processing and recycling, and remediation; f. Logistics; g. Art, entertainment and recreation; h. Hospitality; i. Agriculture, forestry and fisheries; j. Leasing, manpower, travel, and other support activities; k. Financial services and insurance; l. Health and social activities; m. Information and telecommunications; n. Extractive industries; o. Power, gas and geothermal, and temperature-control systems; p. Large-scale retailing and wholesale, motor vehicle repair and maintenance; q. Miscellaneous services; and r. Professional, scientific and technical.

 

2. Decree 228 allows the Minister or “an authorized official” (pejabat yang ditunjuk) to grant exemptions so that employers may hire expatriates for jobs that are not expressly referred to in the list of prescribed positions, should this be considered necessary.

 

Some of the previous sectoral ministerial decrees that have been revoked by Decree 228 also allowed the Minister to grant such exemptions, while others did not. None of the revoked decrees provided for this authority to be delegated to an authorized official.

 

Thus, it should be easier and quicker for an employer to obtain an exemption as it may now be granted by an authorized official, without the employer having to go all the way to the top, which would obviously be more time consuming.

 

Further, exemptions may now be granted in respect of all of the business / commercial sectors listed in Decree 228, whereas previously such exemptions could only be granted in the case of certain sectors.

 

3. Under a number of the previous sectoral decrees that have been revoked by Decree 228, expatriates working in certain business sectors could only be employed for specified periods of time. By contrast, Decree 228 sets no limits on the length of time an expatriate may be employed in any business sector. However, it should be pointed out here that an expatriate employee continues to be subject to the time limit incorporated in the approval for their employment that is issued by the Ministry of Manpower, as well as immigration requirements. Employment is normally permitted for a period of one year, which may be extended.

 

4. Decree 228 reiterates once again that expatriates may be employed as directors and commissioners (save where they have responsibility for human resources matters, as further discussed in paragraph 5 below). As this has long been established and accepted, the incorporation of this provision appears to be solely for purposes of clarity.

 

5. While Decree 228 revokes all of the previous regulations listing roles that may be filled by expatriates, it does not revoke Minister of Manpower Decree No. 40 of 2012,[4] which lists roles that may not be filled by expatriates. The principal restriction imposed by Decree No. 40 of 2012 is that an expatriate may not be employed in any role that involves responsibility for human-resources matters. As this decree has not been revoked, such prohibition remains in effect.

 

C. Specific Sectoral Requirements

 

Decree 228 imposes specific requirements for certain roles in a small number of sectors. In particular, many directorial and senior positions in the extractive industries require an expatriate to have a bachelor’s degree and between 8 and 15 years’ work experience. Interestingly, it is not expressly stated that the degree and/or work experience must be in a relevant field. However, it may be assumed that this will be required.

 

D. ABNR Commentary

 

Decree 228 is to be welcomed for the greater clarity and convenience it will provide to employers as it consolidates information on the jobs that are open to expatriates in a single list, whereas previously this information was scattered across a long series of stand-alone sectoral regulations. The fact that exemptions may now be provided by the Minister in all business sectors, and that the authority to issue such exemptions may be delegated to an “authorized official,” is also to be welcomed.

 

Nevertheless, we cannot help wondering why the Manpower Ministry considers it necessary to continue with its microregulation approach by restrictively listing the roles that may be filled by expatriates. Given the rapid developments and advances taking place in such fields as information technology and fintech, new roles and job categories are constantly emerging, meaning that a list of jobs or roles that is set out in statutory form will always lag behind what is happening in the real world, notwithstanding that Decree 228 provides that the list should be reviewed every two years (or from time to time as required).

 

To a certain extent, the Ministry’s approach may be seen as being in line with the overall philosophy underlying the Indonesian expatriate employment regime, as elaborated in the Manpower Law,[5] namely, that foreigners may only be employed in positions for which there are an insufficient number of Indonesian candidates. So, perhaps the Ministry feels that it is under a statutory obligation to issue a comprehensive list of such positions.

 

Nonetheless, it would appear to be much simpler, more straightforward and eminently more practical for all concerned if the Ministry were to just draw up a short and concise list of those jobs that may not be held by expatriates (as is already the case in the human-resources arena), rather than issuing a voluminous and unwieldly list of jobs that may be held by expatriates.

 

Such an approach would allow employers the freedom to promptly respond to advances in technology and changing circumstances by designating new roles as required, and to employ expatriates based on the real roles that need to be filled, without having to go through somersaults so as to fit these roles into the straightjacket established by Decree 228. Surely it is the employer that best knows which roles are required by their business and who is most qualified to fill these roles?

 

Of course, it is true that exemptions from the list of prescribed jobs may be granted by the Minister or an authorized official. However, this simply adds another layer of bureaucracy that would be entirely unnecessary should the jobs that are open to expatriates be regulated more flexibly rather than based on microregulation (or even overregulation), as is the case at present.

 

By Indra Setiawan (isetiawan@abnrlaw.com) and Aghniya Sabila (asabila@abnrlaw.com

 

[1] Minister of Manpower Decree No. 228 of 2019 on Prescribed Positions That May be Filled by Expatriate Employees (Keputusan Menteri Ketenagakerjaan Nomor 228 Tahun 2019 Tentang Jabatan Tertentu yang Dapat Diduduki Oleh Tenaga Kerja Asing)

[2] Minister of Manpower Regulation No. 10 of 2018 on Procedures for the Employment of Expatriate Manpower (Peraturan Menteri Ketenagakerjaan No. 10 Tahun 2018 tentang Tata Cara Penggunaan Tenaga Kerja Asing)

[3] The KBLI is a comprehensive list of business classifications that is prepared by the Central Statistics Bureau (Badan Pusat Statistik / BPS) based on the United Nations’ International Standard Industrial Classification of All Economic Activities (ISIC), the ASEAN Common Industrial Classifications (ACIC) and East Asia Manufacturing Statistics (EAMS), as adjusted to take account of local conditions. The most recent version of the KBLI is incorporated in Central Statistics Bureau Regulation No. 19/2017 on the Amendment of Central Statistics Bureau Regulation No. 95 of 2015 on the Indonesian Standard Business Classification (Peraturan Kepala Badan Pusat Statistik Nomor 19 Tahun 2017 Tentang Perubahan atas Peraturan Kepala Badan Pusat Statistik Nomor 95 Tahun 2015 Tentang Klasifikasi Baku Lapangan Usaha Indonesia)

[4] Minister of Manpower Decree No. 40 of 2012 on Particular Roles that May Not be Filled by Expatriate Employees (Keputusan Menteri Tenaga Kerja dan Transmigrasi Nomor 40 Tahun 2012 Tentang Jabatan-jabatan Tertentu yang Dilarang Diduduki Tenaga Kerja Asing)

[5] Law No. 13 of 2003 on Manpower (Undang-undang Nomor 13 Tahun 2003 Tentang Ketenagakerjaan)

 

This ABNR Legal Update and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this Legal Update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.