Virginia, US
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| Kenneth Lau

The Indonesian Language Proficiency Requirement - The Potential Impact of Enforcement

In late January 2015, the Indonesia Ministry of Manpower and Transmigration (MOMT) issued fresh regulations setting out standard operating procedures for its new presence at the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal, BKPM). Included in the updated guidelines was MOMT’s most detailed explanation yet of a Bahasa Indonesia language proficiency requirement for work permit applicants.
What are the regulations?
Regulations requiring foreign nationals to be able to communicate in Bahasa Indonesia have been included in law since at least 2008. More recently, under MOMT regulations from late 2013, foreign nationals are now expected to comply with the language requirement, although the MOMT has thus far refrained from enforcing this change for work permit applications.
Under Article 26(1)d Regulation 12 of the 2013 regulations, MOMT declares that:
"The foreign worker who is employed by the employer must meet the following requirements:
…can communicate in the Indonesian language."
MOMT made no further mention of this requirement until recently. New regulations dated 26 January 2015 (known as the “2015 regulations” or “Regulation 3 of 2015”), clearly outline what MOMT now expects:
"Certification of Indonesian language skills, which are tested through a competency test by the [Indonesian Institute], which is excluded for the positions of directors or commissioners, as well as certain positions that require special expertise or skills."
Therefore, not only does Bahasa language proficiency remain as one of the requirements for an expatriate to obtain a work permit, MOMT has now also indicated that a certificate of proficiency be provided as evidence of compliance.
It should be pointed out that the 2015 regulations lay out the standard operating procedures for MOMT’s operations at BKPM. MOMT has established an office at BKPM to process work permit-related applications from companies under BKPM’s One Stop Service (OSS) Center.
One interpretation of the 2015 regulations and proficiency certificate requirements could be that these new rules apply only to applications filed through the OSS. Whether these changes will also apply to MOMT’s main office, where most applications are currently filed, is yet to be clarified.
When will the changes be implemented?
While it is clear that the authorities in Indonesia are increasingly turning their attention to this requirement, what is less clear is their timeline for implementation, even though regulations already reflect the changes.
In any case, it does appear that an amendment to Regulation 12 of 2013 will shortly be issued, which would be in line with Regulation 3 of 2015. If, as indicated, Regulation 3 of 2015 applies only to the yet to be established MOMT office at BKPM, it would also be expected that the amendment of Regulation 12 of 2013, which currently applies to MOMT’s main office, would apply to all work permit applications.
It is anticipated that the amendment could be issued as early as April or May 2015.
Obstacles to implementation
Currently, it would seem that MOMT is not yet sufficiently ready to implement the Bahasa Indonesia proficiency requirement and is still in discussions regarding the complex technical aspects such a change would involve. For example, there may be several options available for the examination, including:
  • The expatriate taking an online test and possible interview via video chat, e.g. Skype; or
  • Appointment of an institution in Indonesia, such as Indonesia University, to:
    1. Create and/or arrange the Bahasa proficiency test; and
    2. Issue a certificate for upload to the MOMT system
Irrespective of which option MOMT takes, it is likely to wait for the expected amendment of Regulation 12 of 2013 before it determines how to proceed. MOMT’s work permit system is now largely online, so it is likely the system will be adjusted to require applicants to upload their proficiency certificate as part of the application process.
Possible exceptions
Based on Regulation 3 of 2015, “directors, commissioners, as well as certain positions that require expertise or special skills” will be exempt from the Bahasa proficiency requirement. As it currently stands, MOMT is still holding internal discussions on the definition of “certain positions that require expertise or special skills.”
Furthermore, questions have been raised as to how these new requirements will affect short-term roles and assignments, such as for expatriates who may enter Indonesia for one to two months only. MOMT has yet to formulate a procedure or confirm if such roles would be exempt and, if they are not, indicate how requirements will be enforced for such short-term assignments.
How does this apply to current work permit holders?
MOMT is also yet to confirm whether the Bahasa Indonesia proficiency requirement will now apply to individuals already in Indonesia with valid work permits. While it is likely that the requirement will not be retroactively imposed, there is strong indication that it could come into force when the individual applies to renew their work permit.
It should be noted that the uploading of the Bahasa proficiency certificate is likely to be required at the TA-01 (recommendation for work permit) application stage. For new work permit applications, if the individual does not have such a certificate, then the TA-01 application is likely to be rejected for lack of the requisite documentation. Because the TA-01 application is not required for renewal applications, these will not be affected. However, it is probable that the amendment to Regulation 12 of 2013 will address the Bahasa proficiency requirement for such applications.
What companies can do now
In anticipation of the amendment to Regulation 12 of 2013, some companies have commenced preparations for the implementation of the Bahasa proficiency requirement. A number of businesses, for example, have begun offering Bahasa Indonesia courses to their expats in Indonesia, with several of these companies making it a mandatory requirement. It is not clear at this stage whether certificates from such courses would be sufficient evidence of Bahasa proficiency, particularly as MOMT is likely to collaborate with Indonesian institutions regarding the actual test and certificate. However, it is clear that expats would undoubtedly benefit from such courses, should the Bahasa requirement be enforced.
It is evident that the authorities are increasingly focusing on the Bahasa proficiency requirement for expatriate work permit applicants. The government has valid reasons for doing so, including the development and introduction of the Bahasa Indonesia language globally and the improvement of communications and knowledge transfer between expats and their local Indonesian counterparts. Should MOMT push forward with the implementation of the requirement, and it seems very likely it will, it is important that companies are aware of the potential impact on their expat population.
Special thanks to our co-counsel, PNB Law Firm, for their collaboration on this article.