Indonesia Reintroduces Limits on Outsourcing Under New Manpower Regulation

On April 30, 2026, Indonesia’s Ministry of Manpower enacted Regulation No. 7 of 2026 regarding Outsourcing, introducing a significant shift in the country’s labor regime. The new regulation, consisting of 11 articles, marks a departure from the broader flexibility previously seen under the Job Creation Law framework by reimposing clearer limits on outsourcing practices.

Return of the ‘Positive List’

The new regulation strictly limits outsourcing to designated “Supporting Activities” (Kegiatan Penunjang) and introduces a defined “positive list” of activities that may be outsourced, namely:

1. Cleaning services
2. Catering (provision of food and beverages)
3. Security services
4. Driver and worker transportation services
5. Operational support services (a “catch-all” category)
6. Supporting work in the mining, oil and gas, and electricity sectors

It is important to note that by explicitly framing outsourcing as the “provision of worker/labor services” (penyediaan jasa pekerja/buruh), the regulation draws a clearer distinction between personnel-based outsourcing and business-to-business, results-based contracting arrangements.

Increased Accountability

MoM Regulation No. 7 of 2026 also strengthens oversight and accountability across outsourcing arrangements. User companies are now legally responsible for ensuring that outsourcing providers fulfil workers’ rights, including wages and statutory protections. And outsourcing companies are required to register each outsourcing agreement with the relevant local Manpower Office where the work is performed.

Transition Period and Compliance

The new regulation provides a two-year transition period, giving companies until April 30, 2028, to review and align their existing outsourcing arrangements with the new legal framework.

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