Foreign companies investing in Xindu are not required to pay compensation for foreign workers.

President Joko has allowed businessmen to invest in the new capital (IKN) to recruit foreign workers (TKA), a provision regulated by Government Regulation No. 29 of 2024, which deals with licensing attempts, ease of doing business, and changes in investment facilitation for businesses in the IKN.

The PP requires foreign workers working in IKN to be accompanied by a local worker, and the TKA is valid for a period of 10 years and can be extended, as stipulated in Article 22 (2) of the PP. Labor observers from the University of Indonesia have stated that this requirement is an effort by the government to attract investment to IKN.This is because paragraphs (3) and (4) of Article 22 provide that a foreign company in an IKN will be given special treatment by being exempted from the obligation to pay compensation for the use of foreign workers for compensation for a certain period of time.

He believes that this rule will cause problems in the future and there will also be legal problems in its implementation because it conflicts with the Labor Law. The Labor Law stipulates that foreign workers can only work under a certain time work agreement (PKWT). However, he said that the 10-year service period stipulated in PP 29/2024 with the possibility of extension did not provide legal certainty. This will cause legal problems in the future as there is a 10-year period of work with the possibility of extension. Not only is there legal uncertainty with this regulation, but it could also trigger an influx of foreign workers. As for the economic aspect, the regulation may trigger a mass migration of foreign companies to IKN. Foreign companies in Indonesia will be exempted from paying compensation as they will not be compensated for using foreign workers. Finally foreign companies will be free to recruit foreign workers so that local workers will not be employed.