The Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) has issued OJK Regulation No. 1 of 2026 concerning the Use of Foreign Workers and Knowledge Transfer Programs by Commercial Banks (“POJK 1/2026”), which came into effect on 23 February 2026. This regulation replaces OJK Regulation No. 37/POJK.03/2017 and reflects OJK’s stricter approach to the employment of foreign workers in Indonesia’s banking sector.
The issuance of POJK 1/2026 forms part of OJK’s efforts to align the regulatory framework governing foreign workers with the evolving needs of the banking industry, while strengthening the development of Indonesian human resources through more structured knowledge transfer programs.
Employment of Foreign Workers Must Be Based on Specific Needs and Expertise
POJK 1/2026 emphasizes that the employment of foreign workers in the banking sector cannot be carried out indiscriminately, but must be based on the bank’s need for specific expertise that cannot yet be adequately fulfilled by Indonesian workers.
Pursuant to Article 3 of POJK 1/2026, banks whose shares are at least 25% owned by foreign individuals and/or foreign legal entities may employ foreign workers in the following positions:
- Members of the Board of Directors;
- Members of the Board of Commissioners;
- Executive Officers;
- Positions requiring specific expertise; and/or
- Experts or Consultants.
Meanwhile, for banks with foreign ownership below 25%, the employment of foreign workers is generally more limited, except under certain circumstances as provided under the regulation.
Restrictions on Positions and Areas of Responsibility
POJK 1/2026 also provides clearer limitations regarding the functions and areas of responsibility that may be filled by foreign workers.
Under Article 8 of POJK 1/2026, foreign workers may be employed in the following areas:
- Treasury;
- Risk Management;
- Information Technology;
- Credit or Financing;
- Investor Relations;
- Marketing;
- Finance; and
- Internal Audit.
In particular, the information technology function covers a broad range of strategic activities, including digital banking, financial technology (fintech), artificial intelligence, cloud computing, and big data analytics.
On the other hand, OJK expressly prohibits foreign workers from occupying human resources and compliance functions within a bank’s domestic operations in Indonesia. However, this restriction does not apply to overseas offices operated by the bank.
Strengthening Knowledge Transfer Programs
One of the key objectives of POJK 1/2026 is to ensure that the employment of foreign workers contributes meaningfully to the development of Indonesian human capital.
Accordingly, Article 22 of POJK 1/2026 requires banks employing foreign workers to implement a knowledge transfer program. Such programs must include the appointment of Indonesian counterparts, training for designated counterparts, and the provision of seminars, courses, or other activities aimed at enhancing the competencies of Indonesian employees.
As part of this commitment, each foreign worker employed by a bank in Indonesia must be accompanied by at least two Indonesian employees. This requirement reflects OJK’s expectation that foreign workers should not merely fill short-term business needs, but also facilitate the transfer of knowledge and expertise to Indonesian personnel who may eventually assume similar roles in the future.
In addition, POJK 1/2026 encourages banks to enhance the competencies of Indonesian employees through overseas assignments, including employee exchange programs and intra-corporate transferee arrangements.
Limitation on the Employment Period of Foreign Workers
POJK 1/2026 introduces a more stringent framework regarding the duration of employment of foreign workers.
Under Article 10 of POJK 1/2026, foreign workers serving as Executive Officers, personnel holding positions requiring specific expertise, or Experts and Consultants may be employed for a maximum period of five years. This period is calculated cumulatively for the same position and area of responsibility within the same bank, even if there is a gap or interruption in employment.
Where a bank continues to require the services of a foreign worker beyond the prescribed period, an extension may only be granted upon obtaining OJK approval. In considering such approval, OJK may take into account factors including the specific expertise required, the foreign worker’s performance, and the bank’s efforts to develop Indonesian employees as potential successors.
Regulatory Oversight and Compliance
In addition to imposing stricter requirements on the employment of foreign workers, POJK 1/2026 also strengthens OJK’s supervisory authority. Under certain circumstances, OJK may require a bank to terminate the employment of a foreign worker before the approved employment period expires, including where violations of applicable laws and regulations, prudential principles, or good corporate governance requirements are identified. Banks are also required to submit periodic reports to OJK regarding both the employment of foreign workers and the implementation of knowledge transfer programs as part of the regulatory oversight framework.
Through POJK 1/2026, OJK does not eliminate the use of foreign workers in Indonesia’s banking sector. Instead, it reinforces the principle that their employment must be selective, needs-based, and accompanied by effective knowledge transfer initiatives.
Compared to the previous regulatory framework, POJK 1/2026 places greater emphasis on the development of Indonesian talent through restrictions on positions, limitations on the duration of foreign employment, and more structured knowledge transfer obligations.
For consultation assistance or other legal services from SW Counselors at Law, please contact:
Fanny, S.H.
Senior Associate
T. (+6221) 2222-0200
Bella Siboro, S.H.
Associate
T. (+6221) 2222-0200
