Key provisions

The Financial Services Authority (OJK) has issued Regulation 37/POJK.03/2017 which introduces rules for the employment of expatriates and the transfer of knowledge in the banking sector. Regulation 37 revokes Bank Indonesia Regulation 9/8/PBI/2007. Key provisions include the following:

  • The OJK has taken over the supervisory role previously performed by Bank Indonesia. Therefore, in order to employ an expatriate, a bank must now obtain OJK approval and submit reports on its expatriate staff. Article 10.2 introduces a 10-day timeframe for the submission of such reports.
  • Under Article 4(3) of Regulation 37 an expatriate's work permit will be processed by the Ministry of Manpower only after having been approved by the OJK.

Permitted expatriate roles

Regulation 37 maintains the rules set out previously in Regulation 9 regarding roles that may be filled by expatriates, including the prohibition on expatriates being employed in human resources roles, as follows:

  • A bank with a minimum 25% foreign ownership may employ expatriates as directors, commissioners, executive officers and/or expert advisers or consultants.
  • A bank with less than 25% foreign ownership may employ expatriates as expert advisers or consultants only. However, if a foreign shareholder is also a controlling shareholder, the bank may employ expatriates as directors and commissioners.
  • A branch office may employ an expatriate as its head or as an expert adviser or consultant only.
  • A representative office may employ an expatriate as its head or as an expert adviser or consultant only.

In certain circumstances, banks in the second and fourth categories above may employ expatriates in other roles for a maximum period of one year (Article 16(2)), subject to approval by the OJK.

One week after the issuance of Regulation 37, the OJK issued Circular Letter 42/SEOJK.03/2017 which provides further details of the requirements and mechanisms for the employment of expatriates and the transfer of knowledge in the banking sector.

Circular 42 also provides that expatriates may be employed in banking sector roles related to:

  • the treasury;
  • risk management;
  • information technology;
  • lending and financing;
  • investor and customer relations;
  • marketing; and
  • finance.

Comment

By introducing Regulation 37 the OJK appears to be helping to promote foreign investment by allowing expatriates to occupy key roles in the banking sector, while encouraging them to share their skills and knowledge with their Indonesian colleagues.

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