26 Jan 2018
New Rules on Employment of Expatriates in Banking Sector
The Financial Services Authority (“OJK”) has issued Regulation No. 37/POJK.03/2017 (“OJK Reg. 37”), which sets out new rules on the employment of expatriates and the transfer of knowledge in the banking sector. OJK Reg. 37 revokes Bank Indonesia (“BI”) Regulation No. 9/8/PBI/2007 (“BI Reg. 9”).
The following provisions of OJK Reg. 37 are of particular note:
OJK Reg. 37 maintains the rules set out in BI Reg. 9 on positions that may be filled by expatriates, and the prohibition on expatriates being employed in functions related to human resources.
The key provisions of OJK Reg. 37 may be summarized as follows:
In certain circumstances, banks in the categories referred to in points b) to d) may employ expatriates in positions other than the permitted positions for a maximum period of up to one year (Article 16(2)), based on a recommendation from the OJK.
One week after the issuance of OJK Reg, 37, the OJK issued Circular Letter No. 42/SEOJK.03/2017 (“Circular 42”), which sets out in greater detail 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 positions related to the treasury, risk management, information technology, lending and financing, investor and customer relations, marketing, and finance functions.
In conclusion, the OJK is helping to promote foreign investment by allowing expatriates to occupy key positions in the banking sector, while at the same time encouraging them to share their skills and knowledge with their Indonesian colleagues. (By: Rully Hidayat & Priscilla Rotua Manurung)