“A finance company which tends to hire a foreign worker must meet the requirements: a minimum 25% shares owned by the foreigner and/or foreign entity, having approval from the OJK, and only hiring for the certain positions that eligible and approved by OJK.”
Finance Company
The financial industry is currently experiencing a surge, marked by the emergence of diverse financial companies that span from conventional to technologically advanced entities. In Indonesia, this sector is strictly regulated, and its operation is overseen by the Financial Services Authority (OJK).
The operational framework and business licensing for finance companies in Indonesia is governed by the Regulation of the Financial Services Authority of the Republic of Indonesia Number 35/POJK.05/2018 of 2018 on The Organization of the Business Activities of Financing Companies (“POJK 35/2018“) and the Regulation of The Financial Services Authority Of The Republic Of Indonesia Number 47/POJK.05/2020 Of 2020 On The Business Licensing And Institutional Aspects Of Financing Companies And Sharia Financing Companies (“POJK 47/2020“). According to these POJK, a Finance Company is defined as a business that finances the procurement of goods and/or services. Additionally, the activities of a finance company encompass investment financing, working capital financing, multipurpose financing, and other financing activities authorized by the OJK. Furthermore, finance companies have the flexibility to engage in operating leases and provide fee-based services, provided they adhere to prevailing laws and regulations.
Eligible Positions in Finance Company
As the finance sector expands, it brings forth new employment opportunities for both local and international professionals. However, the scope for expatriate workers is limited, is restricted under the guidelines of POJK 47/2020. According to this regulations, foreign workers are limited to positions such as Directors, Board of Commissioners, Experts, and Consultants. Additionally, foreign workers engaged as experts or consultants are only permitted to handle specific functions, including information technology, risk management, and other functions subject to the approval from OJK.
A comprehensive list of positions available to foreign workers in the financial sector can be found in the Decree of the Minister of Manpower of the Republic of Indonesia Number 228 of 2019. This decree outlines 32 available positions, including roles such as General Manager, Marketing General Manager, Business Development Manager, Information Systems General Manager, Treasury General Manager, Business Promotion Manager, Business Relation Manager, Senior Customer Relation Manager, Head of Planning, and Head of Finance & Accounting. Moreover, it’s worth noting that the positions of Director and Board of Commissioner, while not explicitly listed among the 32 positions, are available with additional provisions governed in POJK 47/2020.
Requirements to Hiring Foreign Workers in Finance Company
Despite Indonesia’s openness to foreign workers (TKA), employment of foreigners is highly regulated to ensure protection of Indonesian citizens working welfare in Indonesia. Thus, there are specific requirements for an expat to be able to work in Indonesia. In accordance to Article 4 of Regulation of the Minister of Manpower of the Republic of Indonesia Number 8 Year 2021 on Implementing Regulation of Regulation of the Government Number 34 Year 2021 on the Utilization of Foreign Workers, every TKA must:
- Have educational qualifications aligned with the position;
- Have relevant competence or experience for a minimum of 5 years; and
- Transfer their knowledge to the Indonesian Worker that will be accompanying them throughout their time working in Indonesia.
In addition to the requirements above, regarding the usage of TKA in finance companies, specific criteria under POJK 47/2020 must be met. Whereby, according to Article 22, only companies with foreign ownership of 25% or more can employ foreign workers. Furthermore, approval from OJK in regard to the employment of the foreign worker is also required prior to the submission of the application of expat working permit to the Ministry of Manpower.
Compliance Reporting
Upon hiring a foreign worker, a company is obligated to submit an annual report to the minister or designated officer. This report should encompass details on the utilization of the foreign worker, the education and job training provided to the Indonesian worker accompanying the foreign worker, and the transfer of technology and expertise. Compliance with this obligation is crucial, as stipulated by Article 39 of Government Regulation Number 34 Year 2021. Failure to adhere to this requirement may lead to the temporary suspension of the expat working permit application approval.
Author: Felicia Cindy Hanubrata
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