EMPLOYMENT REGULATIONS FOR FOREIGN DIRECT INVESTMENT COMPANIES ("FDI")
Foreign entrepreneurs intending to conduct business activities in Indonesia must prepare capital and skilled labor. This is to ensure that the established company operates smoothly and develops according to the desires of the foreign entrepreneur. The Indonesian government has regulated foreign investment, including regulations regarding employment for investment activities, summarized in Law Number 25 of 2007 concerning Investment ("Investment Law"). For foreign companies conducting investment in Indonesia, the provisions regarding employment that must be considered by FDI companies are stipulated in Article 10 of the Investment Law, as follows:
- Companies engaging in investment activities must prioritize employing Indonesian citizens for their labor needs.
- Companies engaging in investment activities have the right to employ foreign experts for specific positions and expertise according to the provisions of the laws and regulations.
- Companies engaging in investment activities must enhance the competency of Indonesian workers through job training by the provisions of the laws and regulations.
- Companies engaging in investment activities that employ foreign workers are required to provide training and transfer technology to Indonesian workers according to the provisions of the laws and regulations.
In addition to the above provisions, some legalities need to be considered by FDI companies as regulated under the Manpower Law to employ foreign workers ("FW"). If an FDI company plans to employ foreign workers, the required legality for employing foreign workers based on Article 6 of Government Regulation Number 34 of 2021 concerning the Utilization of Foreign Workers ("GR No. 34/2021") is the Foreign Manpower Utilization Plan ("RPTKA"), which needs to be approved by the Ministry of Manpower.
It should be noted, as stipulated in the Minister of Manpower Decree Number 349 of 2019 concerning Certain Positions Prohibited for Foreign Workers (Ministerial Decree No. 349/2019), several positions cannot be held by Foreign Nationals, such as the position of Director of Personnel (Human Resources), for example.
The brief overview above provides a general description of the employment regulations for Foreign Direct Investment (FDI) companies. If you are interested in learning more about this, Suria Nataadmadja & Associates Law Office can assist you.