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Foreign Workers Allowed to Work in IKN for 10 Years

The Indonesian government has recently issued Government Regulation No. 12 of 2023 concerning the Granting of Business Licenses, Business Ease, and Investment Facilities for Business Actors in the New Capital City of Nusantara ("GR 12/2023"), which came into effect on March 6, 2023.

GR 12/2023 contains regulations regarding foreign workers who are permitted to work in the Capital City of Nusantara (Ibu Kota Nusantara or IKN). According to Article 22, business actors conducting activities in the IKN area may employ foreign workers for specific positions in accordance with the provisions of the legislation. Furthermore, business actors may obtain approval for the utilization plan of foreign workers for a period of 10 (ten) years, which can be extended.

Business actors involved in strategic government projects in IKN are among those who can employ foreign workers. These business actors are exempted from the obligation to pay compensation for the utilization of foreign workers, known as Dana Kompensasi Penggunaan TKA or DKPTKA, for a specific period. DKPTKA is the compensation that must be paid by the Employer for each foreign worker employed as non-tax state revenue or regional income. However, government agencies, foreign state representatives, international organizations, social institutions, religious institutions, or specific positions in educational institutions are exempt from the obligation to pay DKPTKA as determined by the legislation. The specific period for exemption from compensation payment is to be determined by the regulation of the Head of the IKN Authority.

Additionally, Article 23 clarifies that foreign workers can be granted a residence permit for a maximum period of 10 (ten) years as per the legislation. Moreover, when the residence permit is nearing expiration, an extension can be granted based on the employment agreement between the business actor and the foreign worker. The scope of GR 12/2023 broadly encompasses five aspects, including business licensing, business facilitation, investment facilities, supervision, and evaluation.

If you need consultation concerning these issues, Schinder Law Firm is one of the many corporate law firms in Indonesia, our professional civil lawyers strive to understand your unique needs and concerns. We will develop creative, cost-effective ways to assist you. Contact us at info@schinderlawfirm.com today to schedule a consultation to discuss your situation and how we can be of help.

Author: Dewi Susanti

Schinder Consultant London Ltd.


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