Mandatory Manpower Report to be Submitted Online
The Ministry of Manpower Regulation No.18 of 2017 which took effect on 6 November 2017 has introduced an online submission via the following website: http://wajiblapor.kemnaker.go.id/wlp/login.php for the mandatory manpower report which companies are required to submit to the Ministry of Manpower on an annual basis.
The regulation mandates that all companies incorporated in Indonesia must submit their online manpower report in the following circumstances:
- 30 days after the establishment of the company or the recommencement of the company’s operations;
- 30 days before or after a change in the company’s domicile or ownership (e.g. where the company relocates its offices within Indonesia, or there is a change of ownership in the company);
- 30 days before the cessation, liquidation or dissolution of the company’s business (e.g. if the company’s domicile is no longer Indonesia);
- annually, every December.
All companies that have submitted the report manually must re-submit the 2018 report online before 6 November 2018.
2018 Jakarta Regional Minimum Wage
The Governor of DKI Jakarta has set the increase of the regional minimum wage at 8.71%. This percentage figure is in line with the Minister of Manpower’s circular letter issued on 13 October 2017, which states that the regional minimum wage calculation should take into account the national inflation rate and economic growth rate published by the Indonesian Central Agency on Statistics (Badan Pusat Statistik) (currently 3.72% and 4.99%, respectively). Employers in Jakarta must ensure that by 1 January 2018 their employee’s wage will not be less than IDR3,648,035. Up to the date of this publication, the Governor has not determined a sectoral minimum wage, but we anticipate that this may be available by early 2018.
OJK to Supervise Employment of Expatriates in the Banking Sector
In July 2017, the Indonesia Financial Service Authority (Otoritas Jasa Keuangan – “OJK”) issued regulation No. 37/POJK.03/2017 on the Employment of Expatriates and Transfer of Knowledge Program in the Banking Sector, along with its implementing regulation, the OJK Circular Letter No. 42/SEOJK.03.2017 (“OJK Regulations”). Although these regulations supersede the Bank of Indonesia Regulation No. 9/8/PBI/2007, there have been no substantial changes made to the key provisions (other than the fact that supervision duties have been transferred from the Bank of Indonesia to the OJK). Below are the key provisions introduced by the OJK Regulations:
1. For any bank with a minimum of 25% foreign ownership, expatriates are eligible to take the following positions: director, commissioner, executive officer, and/or expert advisor or consultant;
2. For any bank with less than 25% foreign ownership, expatriates may take up the position of expert advisor or consultant. (Note that if a foreign shareholder of such a bank serves as a controlling shareholder or the bank is directly or indirectly controlled by foreign entity/foreign citizen, expatriates may also take up the position of director, commissioner, and/or expert advisor or consultant);
3. Expatriates are permitted to be head of a representative office of a bank or expert advisor or consultant to the representative office;
4. Expatriates are permitted to be head of a branch office of a bank or expert advisor or consultant to the branch office; and
5. Expatriates are prohibited from holding positions in human resources or any compliance department.
Expatriate employees may only be employed to carry out treasury, risk management, information technology, lending and financing, investor and customer relations, marketing, and finance functions.
Other Key Requirements
- For the purpose of facilitating the transfer of knowledge, the bank (as the employer) should appoint at least two Indonesian employees for every expatriate who holds a position as executive officer and/or expert advisor or consultant to be his/her working associate.
- The employment of expatriates will require the approval of OJK banking (a division/commissioner within the OJK who has regulatory and supervisory authority and functions in respect of the banking business sector).
- Other positions or functions may only be carried out after obtaining approval from OJK banking for such position or function.
Kadin Pushes to Revise the Manpower Law
The Indonesia Chamber of Commerce and Industry (Kamar Dagang dan Industri Indonesia – “Kadin”) has made calls to revise Law No. 13 of 2003 on Manpower (“Manpower Law”), particularly in relation to its severance package payment provisions. Kadin is of the view that the severance payment provision contained in the Manpower Law, which entitles employees to up to 32 times their monthly salary when the company dissolves, has made investors reluctant to start business in Indonesia.
DJSN Encourages Employers to adjust their policies on pensionable age
The Board of National Social Security (Dewan Jaminan Sosial Nasional – “DJSN”), an agency board in charge of advising the President on social security policy, recommends that stakeholders (i.e. the government, employers’ associations and labour unions) consider determining the applicable pensionable age of employees to be within the range of 56 to 59 years old, in order to allow employees to cash out their pensions between the ages of 56 and 59, instead of waiting to reach the age of 65. This is due to the provisions under Government Regulation No. 45 of 2015 on the Management of the Pension Security Program which specifies that participants are only eligible to cash out their pensions:
- before 1 January 2019 – if they have reached the age of 56 years old; and
- on and after 1 January 2019 – if they have reached the age of 57 years old. After every third year, this age will increase by one year until the participant reaches 65 years old.