New Guidelines on the Employment of Foreign Workers in the Banking Sector
On February 6, 2026, the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued Regulation No. 9 of 2026 on the Utilization of Foreign Workers and Knowledge Transfer Program by Commercial Bank (the “Regulation”). The Regulation came into effect on February 23, 2026 and revoked OJK Regulation No. 37 of 2017 (the “Previous Regulation”).
The Regulation sets out updated requirements and obligations relating to the employment of foreign workers in the banking sector. It covers, among others, the principles governing the utilization of foreign workers, hiring procedures, knowledge transfer obligations, stay permit requirements, and termination of employment.
Below, we highlight the key points and updated rules that banks should note under the Regulation.
♦ Permitted Positions and Scope of Responsibilities
The Regulation permits certain positions to be filled by foreign workers, subject to the bank’s ownership structure.
1. For banks with 25% or more of their shares owned by foreign individuals or entities, the foreign workers may be appointed to the Board of Directors (“BOD”), Board of Commissioners (“BOC”), as Executive Officers, to certain positions requiring specific competencies; and/or as expert personnel and consultants.;
2. For banks with less than 25% of their shares owned by foreign individuals or entities, foreign workers may only be appointed as expert personnel and consultants. However, where the foreign shareholder qualifies as a controlling shareholder or there are elements of control by foreign individuals or entities, the bank may appoint foreign workers to positions on the BOD, BOC, as well as to roles as expert personnel and consultants.
Article 8 of the Regulation further specifies the areas of responsibility that may be assigned to foreign individuals, including treasury, risk management, information technology, credit or financing, marketing, finance, and internal audit. Foreign individuals are restricted from holding responsibilities in human resources and compliance, except for bank offices located overseas.
Assignments outside the permitted scope may be allowed in specific circumstances, subject to prior approval from OJK. In granting such approval, OJK will consider factors such as the bank’s needs, availability of Indonesian workers, compliance with regulatory requirements, efforts to develop local talent, and the principle of reciprocity.
♦ Employment Procedures
Banks intending to employ foreign workers must include such plan in their business plan submitted to OJK. The plan should outline, among others, the rationale for hiring, roles and responsibilities, number of foreign workers, designated supporting personnel, and a knowledge transfer program.
The appointment of foreign workers as members of the BOD, BOC, or as heads of foreign bank offices requires prior OJK approval through a fit and proper test. Such approval must be obtained before the bank submits the Foreign Worker Utilization Plan (RPTKA) to the Ministry of Manpower. For executive officers, a similar process applies, but without a fit and proper test, and is instead subject to the submission of supporting documents.
♦ Knowledge Transfer Program
Banks employing foreign workers are required to implement a knowledge transfer program for Indonesian employees, particularly where foreign workers serve as executive officers, experts, or consultants. The Regulation introduces a new requirement for banks to include a knowledge transfer plan as part of their proposal to employ foreign workers. In addition, the banks must provide opportunities for selected Indonesian employees to participate in competency development programs abroad.
♦ Employment Term and Termination
In contrast to the Previous Regulation, which limited the employment term of foreign workers to 3 years with a possible extension of up to 1 year, the Regulation extends the maximum term to 5 years. Article 29 further provides that where a bank seeks to extend the employment of a foreign worker within this period, it must submit a request for extension to OJK. In any event, the total duration of employment must not exceed 5 years.
The Regulation also introduces a new authority for OJK. It stipulates that OJK has the authority to require a bank to terminate the employment of a foreign worker prior to the expiration of the employment contract. OJK may exercise this authority on the following grounds: (i) the provision of false or misleading information to OJK, (ii) the foreign worker being found guilty of a criminal offense pursuant to a final and binding court judgment, (iii) failure to comply with the requirements set out under the Regulation, and/or (iv) a violation by the foreign worker of the principles of prudence and good governance. Any early employment termination by the bank must be reported to the Minister of Manpower.
♦ Sanctions
Non-compliance with the Regulation may subject banks to administrative sanctions imposed by OJK, including written warnings, a downgrade in the bank’s corporate governance factor under the bank soundness level assessment, restrictions or prohibitions on certain business activities, and/or monetary fines.
AKSET
Please contact Thomas P. Wijaya (twijaya@aksetlaw.com) or Muhammad Dzaki Ramadhan Al Rizal (mrizal@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without our prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
