Indonesia: New Guidelines from the Financial Services Authority on the Use of Foreign Workers and Knowledge Transfer in Commercial Banks
On 6 February 2026, the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan or “OJK”) issued OJK Regulation No. 1 of 2026 on the Use of Foreign Workforce and Knowledge Transfer Programs by Commercial Banks (“OJK Reg. 1/2026”). In general, this regulation limits the use of foreign workers in commercial banks to certain positions and functions, subjects their employment to OJK approval and reporting requirements, and mandates knowledge transfer programs to support the development of Indonesian employees.
Under Article 3 (1) of OJK Reg. 1/2026, a bank whose shares are 25% or more owned by foreign citizens and/or foreign legal entities may employ foreign workers for the following positions:
- members of the board of directors;
- members of the board of commissioners;
- executive officers;
- certain positions requiring special expertise; and/or
- experts or consultants.
On the contrary, where less than 25% of a bank’s shares are held by foreign citizens and/or foreign legal entities, such a bank is not permitted to employ foreign workers except in the position of a specialist or consultant (Article 4 (1) of OJK Reg. 1/2026). However, this restriction does not apply where: (i) the shareholding of foreign citizens and/or foreign legal entities in the bank is less than 25%, but such foreign citizens and/or foreign legal entities constitute the controlling shareholder of the bank; or (ii) there is an element of control by foreign citizens and/or foreign legal entities over the bank (Article 4 (2) of OJK Reg. 1/2026).
Additionally, the regulation stipulates that a branch office of a bank domiciled outside Indonesia (Kantor Cabang dari Bank yang Berkedudukan di Luar Negeri or “KCBLN”) and a representative office of a bank domiciled outside Indonesia (Kantor Perwakilan dari Bank yang Berkedudukan di Luar Negeri or “KPBLN”) may only employ foreign workers as the head of the KCBLN/KPBLN and/or as experts or consultants. However, a foreign worker employed as the head of a KCBLN must be paired with at least 1 (one) Indonesian national who also serves as a head of the KCBLN (Article 7 of OJK Reg. 1/2026).
To employ foreign workers, banks must fulfil the prerequisite of filing for a Foreign Worker Utilization Plan to the OJK (Article 12 to 14 of OJK Reg. 1/2026). In addition, foreign workers to be employed as directors, commissioners, heads of KCBLNs, and/or heads of KPBLNs must first obtain approval from the OJK (Article 15 of OJK Reg. 1/2025).
Foreign workers employed at banks or KPBLNs may only be assigned to the following functions: (i) treasury; (ii) risk management; (iii) information technology; (iv) credit or financing; (v) investor relations; (vi) marketing; (vii) finance; and/or (viii) internal auditing (the “Permitted Fields”) (Article 8 (1) of OJK Reg. 1/2026). If it is necessary to employ foreign workers in positions outside the Permitted Fields, the bank or KPBLN must first obtain approval from the OJK (Article 9 of OJK Reg. 1/2026).
Furthermore, banks or KPBLNs that employ foreign workers as executive officers, in certain positions requiring special expertise, and/or as experts or consultants are required to implement a knowledge transfer program (Article 22 (1) of OJK Reg. 1/2026). In addition, banks must submit a report on the actual utilization of foreign workers, as included in the bank’s business plan realization report, to the OJK (Article 24 (1) of OJK Reg. 1/2026).
Such knowledge transfer program is implemented by appointing at least 2 Indonesian workers within the bank as counterparts for 1 foreign worker, or at least 1 Indonesian worker within the KPBLN as a counterpart for 1 foreign worker. In addition, such counterparts must receive education and job training in accordance with the qualifications held by the relevant foreign worker. The training or teaching to be provided by foreign workers to employees of the bank or KPBLN may be conducted through seminars, training sessions, short courses, and/or other types of programs, whether held online or offline.
Key Takeaways
OJK Reg. 1/2026 reflects a marked increase in OJK scrutiny over banks and their foreign worker arrangements, requiring that foreign workers be employed only in certain permitted positions and functions, and that their employment be accompanied by structured knowledge transfer to Indonesian personnel as part of workforce development. Careful attention should therefore be paid to compliance with the regulation, including its approval and reporting requirements, as non-compliance may result in administrative sanctions, including written warnings, governance downgrades, activity restrictions, and monetary fines of up to IDR2,000,000,000 for banks and IDR100,000,000 for KPBLNs.
