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BPJS Premiums Increase by 100 Percent

On October 24, 2019, the Government officially increased the premium of the Healthcare and Social Security Agency (“BPJS Kesehatan”) under Presidential Decree No. 75 of 2019 on Amendments to Presidential Decree No. 82 of 2018 on Health Insurance (“Decree 75/2019”). Prior to the issuance of this new Decree, the government sets forth the amount of different types of BPJS Kesehatan’s premiums under Presidential Decree No. 82 of 2018 dated September 18, 2018 on Health Insurance (“Decree 82/2018”). We outline below the summary of the changes introduced by Decree 75/2019:

♦  Major Changes in the New Health Insurance Law

November 6, 2019

Copyright © 2019 AKSET. All rights reserved.

by Bonar

New OJK Regulation on Anti-Money Laundering and Prevention of Terrorism Funding in Financial Services Sector

The Financial Services Authority (Otoritas Jasa Keuangan - “OJK”) issued OJK Regulation No. 23/POJK.01/2019 on September 30, 2019 (“POJK 23/2019”) to amend several provisions of the previous OJK Regulation No. 12/POJK.01/2017 on the Implementation of Anti-Money Laundering and Prevention of Terrorism Funding in Financial Sector Programs (“POJK 12/2017”).

POJK 23/2019 does not provide significant change on the principles of POJK 12/2017, instead, POJK 23/2019 provides further clarification on several provisions and additional requirements to the existing provisions. For example, POJK 23/2019 now clearly (i) provides the types of organization considered as “corporations”, which had not been defined in POJK 12/2017, to include among others, company, foundation, cooperative, religious organization, political party, non-government organization or non-profit organization, and social organization; (ii) requires Financial Services Providers (“FSPs”) to do risk assessment, which previously did not specifically refer to any regulation, to currently refer to Indonesia’s Money Laundering Act and Terrorism Funding Act risk assessment both sectoral and nationally; and (iii) issuing new requirement for FSPs to take into account the materiality and risk level in updating obtained customer data.

Most importantly, POJK 23/2019 now includes prevention against Proliferation of Weapons of Mass Destruction (“PWMD”), allows face-to-face customer verification to be conducted by third parties, revoking customer due diligence exemption for low risk customers, as well as requires all FSPs (remitting, intermediary, and receiving banks) to conduct verification of transaction against a maintained blacklist of customers.  Further elaborations are to be provided, as follows.

♦  Proliferation of Weapons of Mass Destruction

In addition to money laundering and terrorism funding, POJK 23/2019 now includes prevention against PWMD. PWMD means dissemination of nuclear, biology, and chemical weapons. This addition serves as a form of implementation of the Resolutions on the prevention of the Proliferation of Weapons of Mass Destruction of the United Nations Security Council, to which Indonesia has been elected, on 8 June 2018, as a non-permanent member for the period 2019-2020, along with Germany, South Africa, Belgium and the Dominican Republic. POJK 23/2019 was issued to follow up on the Joint Regulation issued by the Minister of Foreign Affairs of the Republic of Indonesia, the Chief of the Indonesian National Police, the Head of the Financial Transaction Reports and Analysis Center, and the Head of the Nuclear Power Supervisory Agency on Inclusion Identity of Person or Corporations in the List of Funding for the Proliferation of Weapons of Mass Destruction, to maintain world security and peace which is the national goal of Indonesia.

POJK 23/2019 obliges FSPs to have an adequate risk management system; refuse to establish any banking relationship; reject, and cancel any transaction with customers listed in the PWMD list. It also requires FSPs to maintain a list of PWMD funding, identify and verify periodically the PWMD funding list. Once a customer or any information is identified to be listed in the PMWD funding list, FSPs shall immediately block the transaction. FSPs are also prohibited from providing, giving, or lending any fund to or for the interest of a person or a corporation which identity is listed in the PWMD funding list. FSPs may obtain the PWMD list from the Center of Financial Transaction Reporting and Analysis (Pusat Pelaporan dan Analisis Transaksi Keuangan or “PPATK”); resolutions of the United Nations’ Security Council; as well as other commonly used sources.

♦  Face-to-face Verification by Third Parties

POJK 23/2019 now allows such face-to-face verification process (e.g., through video banking on the FSP’s equipment) to be conducted by electronic means owned by third parties. Initially, POJK 12/2017 allowed FSPs to conduct such face-to-face verification process to facilitate a live and online banking services between the potential customer and FSP officer only through the FSP’s own equipment. Nevertheless, such third parties shall first obtain OJK’s approval, which procedure will be further regulated under another OJK Regulation.

♦  Customer Due Diligence and Enhanced Due Diligence

POJK 23/2019 no longer allows low risk Beneficial Owner to be exempted from the Customer Due Diligence (“CDD”) requirement, as previously was provided by POJK 12/2017. Further, instead of treating relevant authority’s confirmation and clarification as a source of information in conducting an Enhanced Due Diligence (“EDD”) for high risk customers, POJK 23/2019 now requires FSPs to obtain confirmation and clarification from the relevant authority in addition to the result of their EDD.

While imposing more stringent requirement upon the obligation of FSPs to conduct CDD and EDD, POJK 23/2019 relaxes the identification and verification requirement for government-related institutions.

For Corporate Beneficial Owners, POJK 12/2017 requires FSPs to identify and verify, among others, the legal relationship between the customer or potential customer and the Corporate Beneficial Owner evidenced by an appointment letter, an agreement, a power of attorney, or another form. Government institutions, state-owned enterprises, or public companies acting as Beneficial Owners are exempted from this requirement. However, under the current POJK 23/2019 this exemption applies not only for Corporate Beneficial Owners, but also to all types of Beneficial Owners, including trust and other legal arrangements.

♦  Fund Transfer and Management of Information

POJK 23/2019 requires FSPs to maintain a blacklist of alleged terrorist, terrorist organizations, as well as a blacklist of PWMD funding. FSPs are to periodically conduct identification and ensure names of customers that have similarities to names and other information listed in the blacklist. Any similarity of name found will oblige the FSP to verify the identity of the customer with other relevant information. This obligation now applies equally to all FSPs, including Remitting Bank, Intermediary Bank, as well as Recipient Bank.

For fund transfer, POJK 23/2019 requires Intermediary Banks to manage the information received from the Transmitting Bank or another Intermediary Bank for at least 5 (five) years after the receipt of the fund transfer order. Recipient Banks are also required to verify the identity of the recipient customer if such identity had not been previously verified.

In the event that any bank receives an offshore fund transfer order without the required information, in addition to refusing to conduct the fund transfer, under POJK 23/2019, not only the Remitting Bank but also the Intermediary Bank are required to take adequate measures, in line with straight-through processing, to identify such fund transfer. In such case, a Recipient Bank is also obliged to take adequate measures to identify the fund transfer, including by monitoring on or after the fund transfer is conducted. Moreover, FSPs shall now manage and submit any data, information and/or documents demanded by the OJK or other relevant authority as soon as possible, within 3 (three) business days at the latest upon receiving such demand from the OJK or other relevant authority.

♦  Reporting and Sanctions

POJK 12/2017 determines that FSPs shall submit to the OJK various documentations with regard to their anti-money laundering and prevention of terrorism funding effort, including implementation action plan; policy adjustments and implementation procedures of the anti-money laundering and prevention of terrorism funding programs; data update plan report; as well as data update realization report. In POJK 23/2019, OJK requires that the data update realization report shall be submitted annually, within 1 (one) month at the latest after the end of the reporting period.

POJK 23/2019 also rearranges the classification of FSPs to be imposed by fines in case of late report submission. In light of this,  now insurance brokers and pawn companies are classified together with rural banks, sharia rural financing banks, multi-finance companies, and venture capital companies which may be exposed by a sanction of Rp50,000 (fifty thousand Indonesian Rupiah) per day to a maximum of Rp5,000,000 (five million Indonesian Rupiah) in case of late submission.

In addition to the above, POJK 23/2019 imposes sanction up to Rp5,000,000,000 (five billion Indonesian Rupiah) for individuals or up to Rp15,000,000,000 (fifteen billion Indonesian Rupiah) for corporations violating the provisions of POJK 23/2019 aside from late report submission, such as failure to maintain and update a blacklist of terrorist, terrorist organizations, and PWMD funding or failure to conduct appropriate CDD and EDD. Finally, POJK 23/2019 provides that this sanction would also be applicable for any violation towards the implementation of anti-money laundering and prevention of terrorism funding programs in the financial services sector prior to the enactment of POJK 12/2017 applicable when the violation were conducted.

October 31, 2019

Copyright © 2019 AKSET. All rights reserved.

by Bonar

BKPM to Launch Online Single Submission System (OSS) Version 1.1 on January 1, 2020

On October 17, 2019, the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued BKPM Letter No. 5743/A.8/B.1/2019 (“Letter 5743”) on Implementation Plan of a New Version of the Online Single Submission (“OSS”) System.

Letter 5743 is addressed to the relevant ministries and local Governments. Letter 5743 explains the launch of the new version of the OSS System, called OSS Version 1.1, on November 4 [Based on the Latest Announcement from BKPM, the launching date will be rescheduled to January 1, 2020]. In connection with the launch, there will be a suspension of the business licensing process from December 31 at 00:00 - 23:59 WIB.

In Letter 5743, BKPM instructs all Regional Governments to adjust their licensing systems in order to be able to integrate with the new OSS System for the purpose of ensuring compliance of the commitments of business licensing by the business actors.

The OSS Version 1.1 is an upgraded version of the current OSS System which is built by BKPM based on the evaluation of the deficiency and limitation of the current version and the development of the new database and the validation processes.

We set out below a summary of the differences between the OSS Version 1.1 and the current OSS System:

♦  Account Registrations

In the current version of OSS System, the types of business actors (non-individuals, individuals, or representatives) are provided without any further explanation. The OSS Version 1.1 will explain the definitions of each type of the business actors.

♦  Business Licensing Stages

The stages of business licensing in the current OSS System is combined in a cycle, which comprises 5 (five) steps: (i) the notarial deed(s), (ii) data completeness, (iii) the business licenses, (iv) the business and commercial license commitments, and (v) the output.

The stages of business licensing in the OSS Version 1.1 will be divided based on the output of such stages which consist of the following steps: (i) legality of the data, (ii) Business Identification Numbers (Nomor Induk Berusaha or NIB), (iii) Business Licenses, and (iv) Operational or Commercial Licenses (Izin Operasional/Komersial or IOK).

♦  Legality of Data Entry Format

For the legality of the data entry format, the current OSS System only provides for one format, which is for a limited liability company (Perseroan Terbatas or PT). In the OSS Version 1.1, the legality of data entry format will be available for business entities (i.e., limited partnerships, firms, etc.) and legal entities (i.e., PTs, cooperatives, and foundations).

♦  Main Activities and Supporting Activities

In the current OSS System, there is no distinction between the main activity(ies) of a business and the supporting activity(ies).  The OSS Version 1.1 accommodates the business actors to differentiate between the two groups, with different requirements for the main activities and supporting activities.

♦  Location Permits

The current OSS System only accommodates an application for a land location permit. The OSS Version 1.1 will be improved to also include land, water, and forest area location permits.

♦  Business Licenses

Business licenses in the current OSS System are only classified based their statuses: effective and ineffective.  The OSS Version 1.1 will provide a list of requirements or infrastructure permits which have not been fulfilled for the relevant business licenses. The list will be updated automatically once the required documents have been uploaded.

The OSS Version 1.1 also provides the new features which cover merger business licenses.

♦  Operational or Commercial Licenses (IOK)

Under the current OSS System, BKPM only provides a pre-requisite list of commitments with regard to the IOK. The OSS Version 1.1 provides a cover letter once the commitments have been fulfilled by a business actor. This cover letter will confirm that the business actor is eligible to apply for the IOK based on the relevant ministries.

♦  Validation

Validation in the current OSS System includes: (i) Customs Registration Numbers (Nomor Induk Kepabeanan), (ii) General Legal Administration (Administrasi Hukum Umum) deeds, (iii) Tax Identification Numbers (Nomor Pokok Wajib Pajak) of a company, a shareholder, and a spouse (if applicable), (iv) Detailed Spatial Plans (Rancangan Detil Tata Ruang), (v) the Negative Investment List (Daftar Negatif Investasi), (vi) the Indonesia Standard Business Classifications Code (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI), and (vii) tax holiday. The OSS Version 1.1 will add the Special Economic Zone (Kawasan Ekonomi Khusus), and the company’s deed into the validation process.

To validate a company’s deed, the following requirements shall be met:

• the amount of the issued capital must be in the same with the amount of the paid-up capital;
• the total composition of the shares must match the issued and paid-up capital;
• a domestic capital investment (Penanaman Modal Dalam Negeri) company must not have any foreign shareholder; and
• at least two parties have been confirmed as the shareholders in a new deed of establishment.

♦  Representative and Branch Offices

In addition to a Foreign Company Trade Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing or KP3A), a Construction Service Business Entity (Badan Usaha Jasa Konstruksi Asing or BUJKA), a Foreign Franchise Registration Certificate (Surat Tanda Pendaftaran Waralaba or STPW), the OSS Version 1.1 will include a Foreign Company Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing or KPPA) in the types of foreign representatives.

The OSS Version 1.1 allows the business actors to register branch office for companies.

♦  License Revocation

In the current OSS System, revocation of a license may only be done by way of liquidation (i.e., the winding up of such company). However, in the OSS Version 1.1 the revocation of license can be done by way of liquidation and non-liquidation (i.e., only revoking the business license or the project while the entity will continue to exist).

♦  Total Investment Value

Unlike the current version of the OSS System which allows the total investment value based on a combination of investment for more than one business fields, provided that they have the same first 2 (two) digits of the KBLI codes, under the OSS Version 1.1, the total investment value will be calculated based on all 5 (five) digits of the KBLI codes.

This implementation is in accordance with the Negative Investment List which uses the 5 (five) digits of the KBLI codes.  This is also for the benefit of the preparation of the investment realization that also uses the same method. Therefore, the business actors who have an NIB will need to adjust the total investment realization per 5 (five) digits KBLI under the OSS System Version 1.1. This means that any addition of a business field will be subject to an additional investment of more than Rp10,000,000,000.

♦  Notification of Fulfillment of Commitment

The OSS Version 1.1 provides a new feature on the validation process for the investment commitments which allows the Regional Governments to issue an approval notification per location project. This is an improvement from the current OSS System which cannot asses the fulfillment of commitments if such location project is located in the same district.

♦  Filter on Distribution Arrangements

The OSS Version 1.1 provides a filter for a distributor company (KBLI code 46) to not be able to also sell goods to consumers in retail nor engage any retailer activities (KBLI code 47).

October 21, 2019

Copyright © 2019 AKSET. All rights reserved.

by Bonar

Minister of Trade Relaxes Franchise Regulation

On September 4, 2019, the Minister of Trade (the “MOT”) issued MOT Regulation No. 71 of 2019 on Franchise Implementation (“MOT Reg. 71/2019”). MOT Reg. 71/2019 revokes and replaces a number of regulations on franchise, i.e.:

• MOT Regulation No. 53/M-DAG/PER/8/2012 dated August 24, 2012 on Franchise Implementation as amended by MOT Regulation No. 57/M-DAG/PER/9/2014 dated September 19, 2014 (collectively, “MOT Reg. 53/2012”);
• MOT Regulation No. 68/M-DAG/PER/10/2012 dated October 29, 2012 on Franchise for Modern Store Business (“MOT Reg. 68/2012”);
• MOT Regulation No. 07/M-DAG/PER/2/2013 dated February 14, 2013 on Development of Partnership in Franchise for Food and Beverage Business as amended by MOT Regulation No. 58/M-DAG/PER/9/2014 dated September 19, 2014 (collectively, “MOT Reg. 07/2013”); and
• MOT Regulation No. 60/M-DAG/PER/9/2013 dated October 3, 2013 on Mandatory Use of Franchise Logo.

We set out below the main changes under MOT Reg. 71/2019.

♦  No Limitation on Company-owned Outlets

Previously, MOT Reg. 68/2012 and MOT Reg. 07/2013 limited the maximum number of company-owned outlets for franchisors of modern store (e.g., minimarket, supermarket, or department store) and food and beverage (“F&B”) businesses. MOT Reg. 68/2012 limited modern store franchisors to have maximum 150 (one hundred fifty) company-owned outlets while MOT Reg. 07/2013 limited F&B franchisors to have maximum 250 (two hundred fifty) company-owned outlets. Modern store and F&B franchisors are required to franchise additional outlets if they have reached the maximum number of company-owned outlets. F&B franchisors also have the option to add new outlets by establishing subsidiaries.

MOT Reg. 71/2019 revokes MOT Reg. 68/2012 and MOT Reg. 07/2013 and does not reiterate provisions on maximum number of company-owned outlets. This means that, now, modern store and F&B franchisors can have unlimited number of company-owned outlets in addition to the franchised outlets.

♦  No Requirement for Master Franchise Agreement

MOT Reg. 71/2019 allows a franchisor or sub-franchisor to appoint multiple franchisees or sub-franchisees with clear territory division. This is different than the provision under MOT Reg. 53/2012 that required a franchisor to have a master franchise agreement with a franchisee. With this new provision, a franchisor may appoint different franchisees for different territories in Indonesia.

♦  No Mandatory Local Content

Under MOT Reg. 53/2012, MOT Reg. 68/2012, and MOT Reg. 07/2013, franchisors and franchisees are required to have 80% (eighty percent) minimum local content, in the form of raw material, business equipment, and sale goods. Violation of this requirement is subject to administrative sanctions in the form of written warning up to revocation of Franchise Registration Certification (Surat Tanda Pendaftaran Waralaba or “STPW”). However, exemptions were allowed based on recommendation by the Assessment Team under the Directorate General of Domestic Trade of the Ministry of Trade.

Now, MOT Reg. 71/2019 no longer provides minimum local content requirement and only stipulates that franchise business actors shall prioritize local goods and/or services, as long as the goods and/or services meet the quality standard stipulated in writing by the franchisors. MOT Reg. 71/2019 also stipulates that franchisors shall prioritize processing of raw materials domestically.

♦  No Restriction on Controlling Franchisor

Previously, pursuant to MOT Reg. 53/2012, a franchisor cannot appoint any entity under its direct or indirect control to be its franchisee. This provision no longer exists under MOT Reg. 71/2019.

♦  Franchise Criteria

Similar to MOT Reg. 53/2012, MOT Reg. 71/2019 stipulates that a franchise shall have the following criteria:

• having distinct business characteristics;
• proven profitability;
• having standard of service and offered goods and/or services in writing;
• easily taught and applied;
• continuous support; and
• registered intellectual property (“IP”) rights.

MOT Reg. 71/2019 now provides further details on franchise criteria. The details on franchise criteria are similar with the details stipulated under Director General of Domestic Trade Decree No. 16/PDN/KEP/3/2014 dated March 7, 2014 on Technical Guidelines for Franchise Implementation and Supervision (“DG Decree 16/2014”).

For example, the criterion of “proven profitability” is fulfilled if a franchisor has business experience of at least 5 (five) years, proven with the survival and development of the franchisor’s business in a profitable manner. However, unlike DG Decree 16/2014, MOT Reg. 71/2019 does not require the franchisor to prove its profitability in its financial statements for the past 2 (two) years. MOT Reg. 71/2019 also provides that a franchise shall have a “registered IP rights” and further explains that such IP rights can either be registered already or under registration process with the relevant authority.

In addition to the above criteria, previously, under MOT Reg. 53/2012, franchisors and franchisees can only carry out businesses in accordance with their business licenses. However, MOT Reg. 53/2012 allows franchisors and franchisees to sell supporting products for maximum 10% (ten percent) of the total sale goods. This limitation on sale of supporting products no longer exists under MOT Reg. 71/2019.

♦  Franchise Registration

Under MOT Reg. 71/2019, franchise business actors are still required to be registered to obtain STPW and display the franchise logo in their business location. The difference with the previous regulation is that now, the franchise registration is applied through the Online Single Submission (“OSS”). The OSS Agency will then issue the STPW on behalf of the MOT or the Regent/Mayor in accordance with their authority.

Unlike previously stipulated under MOT Reg. 53/2012, the STPW issued by the OSS will not have a validity period and does not have to be extended every five years. MOT Reg. 71/2019 also no longer requires a “clean break” or a legally binding court decision for the registration of a new franchisee in the event of unilateral termination of the previous franchise agreement by the franchisor.

Existing STPWs are valid until its expiration date and new STPWs shall be applied through OSS after their expiration.

October 4, 2019

by Bonar

Contributions for Oil Fuel Supply and Distribution, and Gas Transportation Through Pipelines

On July 8, 2019, the Government issued Government Regulation No 48 of 2019 on Amounts and Utilization of Contributions of Business Entities in the Business Activities of Fuel Oil Supply and Gas Transportation Through Pipelines (“GR 48/2019”). GR 48/2019 revokes Government Regulation No. 1 of 2006 dated January 30, 2006 on Levy Amounts and Use of Contributions of Business Entities in the Business Activities of Fuel Oil Supply and Distribution and Gas Transportation Through Pipelines (“GR 1/2006”).

The summary of pertinent provisions of GR 48/2009 are set out below.

♦  Contributions Payment

Business Entities that (i) supply and distribute oil fuel (BBM-Bahan Bakar Minyak) or (ii) transport gas through pipelines, are required to pay contributions to the BPH Migas.

The contributions for the oil fuel (BBM) supply and distribution is based on the volume that is sold and covers aviation gasoline, aviation turbine, gasoline, gas oil kerosene, diesel oil, and fuel oil. The contributions payable for the gas transportation are based on the volume that is transported through pipelines on the transmission routes or distribution network areas.

♦  Contributions Amounts

 The contributions amount that is required to be paid for the supply and distribution of oil fuel (BBM) will be as follows:

The sales price above is excluding Value Added Tax (VAT) and Motor Vehicle Fuel Tax.

The contributions amount to be paid for the transportation of gas through pipelines is based on the multiplication of the natural gas volume amount realization which is transported through pipelines and the natural gas transportation tariff per thousand standard cubic feet (MSCF) and the result will be multiplied with a percentage amount which is as follows:

The contributions amount for the trading of natural gas will be as follows:

Gas Volume (in MSCF) or Gas Energy (in MMBTU) x Sales Price x 0.25%

 The contributions shall be paid monthly.

September 18, 2019

by Bonar

Minister of Manpower Regulation on Outsourcing Amended Further

On August 1, 2019, the Minister of Manpower (the “MOM”) issued Regulation No. 11 Year 2019 (“Regulation 11”) to amend several provisions of the MOM Regulation No. 19 Year 2012 dated November 14, 2012 on Requirements for Outsourcing Parts of Work to Another Company (“Regulation 19”). Regulation 19 had previously been amended by the MOM Regulation No. 27 Year 2014 dated December 31, 2014.

Regulation 11 addresses several issues on protection of outsourced workers and adjustments relating to the Online Single Submission (OSS) system for outsourcing related licenses.

Pertinent amendments in Regulation 11 are summarized below.

♦  Outsourcing Companies Need Not Be Limited Liability Companies

Unlike Regulation 19, Regulation 11 allows legal entities other than a limited liability company (or PT in short in Indonesian) to be outsourcing companies.  The legal entities may be a cooperative (Koperasi).

♦  Licenses and Online Single Submission

With the OSS system, the outsourcing business license is now issued through the OSS by BKPM (the Capital Investment Coordinating Board) on behalf of the MOM.

An outsourcing license is now valid for as long as the outsourcing company is in business.  Under Regulation 19, an outsourcing license was valid for 3 years.

♦  Outsourcing Agreements

Regulation 11 now expressly requires an outsourcing to state the obligation to fulfill the rights of the outsourced workers in accordance with prevailing laws and regulations.

♦  Registration of Outsourcing Agreements and Consequences

Regulation 11 clarifies that an outsourcing company (and not the instructing company) has to register the relevant outsourcing agreement. An outsourcing company is no longer required to submit a draft employment agreement as a part of the registration.  Under Regulation 11, now the relevant manpower office must issue the evidence of the registration within 3 (three) working days since the completion of the registration application and all its requirements.

Unlike Regulation 19, Regulation 11 does not allow cancellation of business licenses of an outsourcing company if the outsourcing company has not registered the outsourcing agreement and proceeds with the oursourcing. Instead, the outsourcing company may be subject to administrative sanction (written warnings or suspension of business).

September 18, 2019

by Bonar

Compilation of Positions Available to Expatriates

The Minister of Manpower (the “Minister”) recently enacted the Minister of Manpower Decree No. 228 of 2019 dated August 27, 2019 on Certain Positions Available to Expatriates (“Decree 228”).  Decree 228 lists 2,196 positions available for expatriates. The positions are divided into 18 business sectors, namely, among others, construction, real estate, education, processing industries, transportation and warehousing, financial and insurance activities, mining and extraction, and large and retail trading.

Decree 228 implements Article 42(5) of Law No. 13 of 2003 dated March 25, 2003 on Manpower (the “Manpower Law”) which states that expatriates may only be employed for certain positions and specified term, and that such position shall be stipulated under a separate decree.

Decree 228 compiles, and replaces, previous 19 specific Minister decrees that listed of positions available to expatriates based on business sectors (e.g., construction, education services, trading, industry, etc.).  Decree 228 also revokes all other decrees of the Minister that set out positions that are available to expatriates. So, Decree 228 is now the single decree to review to determine positions available to expatriates.

Note that Decree 228 does not deal with positions that are closed to expatriates under Article 46(2) of the Manpower Law. So, the Minister of Manpower Decree No. 40 of 2012 dated February 29, 2012 on Certain Positions Closed to Expatriates continue to be in effect.

The key issues of Decree 228 are set out below.

♦  Categories of Positions

Decree 228 lists the positions available for expatriates based on the International Standard Classifications of Occupations (ISCO) Code and the Indonesian Standard Occupation Classifications (KBJI). Further information on ISCO may be found in the following link: https://www.ilo.org/public/english/bureau/stat/isco/.

Decree 228 allows expatriates to be members of a Board of Commissioners and a Board of Directors as long as they do not deal with personnel-related matters.

♦  Unlisted Positions

Decree 228 also allows the Minister or any other authorized official to approve a position for expatriates that is not listed in Decree 228.  It remains to be seen how this provision will be implemented in practice.  We believe that the Minister and the relevant officials will not be too flexible in allowing other positions for expatriates.

♦  Periodic Evaluations

Decree 228 states that the lists will be reviewed every 2 (two) years or at any time deemed necessary by the Minister.

September 17, 2019

by Bonar