New Expatriate Work Regulations in Indonesia – Updated

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Ministry of Manpower Regulation 35/2015

 1. General purpose of controlling foreign workers:

  • To protect the Indonesian labor market, to ensure that Indonesians can work in their field and also get proper compensation/salary
  • To protect Indonesian workers from globalization, including from the ASEAN Community. It is implied that any foreign workers working in Indonesia should have proper competency based on the positions allowed by regulation to be filled by foreign workers.
  • To prevent professional Indonesian workers from seeking jobs outside Indonesia, to give them appreciation and a salary based on their profession and expertise
  • To save foreign exchange being used by companies to pay foreign workers.
  • The new regulation mentioned that Associations (UB-Usaha Bersama) and Cooperatives are no longer allowed to hire foreign workers, unless permitted under prevailing laws and regulations

2. Significant changes in requirements to hire foreign workers:

Old Regulation (MoM 12/2013) New Regulation (MoM 16/2015)
Foreign workers need to have a similar education background with their appointed position No Changes
Diploma/resume/certificate of competence relevant to their appointed position, at least five  years’ experience needed Certificate of competence, Have at least five years’ experience relevant to the position
Obligation to transfer knowledge to Indonesian workers (TKI Pendamping) No changes
Bahasa Indonesia competency requirement No longer required
Evidence of an insurance from Indonesian entity provider
Enrolled in National Social Security Program (SJSN) (if stay more than 6 months)
Taxpayer Registration Number (NPWP) (if stay for more than 6 months)

3. The new regulation states that employers of foreign manpower must employ at least 10 Indonesian workers for every one foreign worker.

Update October 2015: this ratio requirement was removed from the 35/2015 regulation update.

4. Temporary RPTKA and Temporary IMTA is now required for:

  • Making commercial films with a permit from the authorized institution
  • Foreign manpower on probation
  • Conducting audits, production quality control or inspections of Indonesian branches for 1 to 6 months.

5. Non-resident Director and Commissioner Work Permits

There is no longer a requirement for non-resident directors and commissioners to obtain work permits. Regulation 35 has removed this requirement.

Regulation 35 states that foreign directors and commissioners that reside in Indonesia need to obtain a work permit. This is not new and was the case even before Regulation 16 was issued.

6. PMDN Companies

Regulation 35 states that a domestic investment (PMDN) company cannot have foreign commissioners. This was not mentioned in Regulation 16.

Under the 2007 Investment Law, PMDN is defined as investment by domestic investors using domestic capital to conduct business in Indonesia.

A 1995 presidential decree stated that a foreigner cannot hold the position of commissioner of a company where all shares are owned by Indonesians. This presidential decree was revoked in 2014 and the presidential regulation that replaced it did not include a similar prohibition. Regulation 35 has now re-introduced this prohibition.

7. Transfer of Knowledge & Counterparting

Regulation 35 states that provisions in relation to transfer of knowledge and counterparting will be further stipulated in a decree of the Director General for Development of Placement of Workers and Expansion of Job Opportunities (Director General). The content of this decree is still unknown.

8. DKP-TKA

Regulation 35 has removed the requirement for the Compensation Fund for Foreign Worker Utilization (DKP-TKA) to be payable in Indonesian Rupiah. As such, the DKP-TKA is still payable in US Dollars. This is consistent with the Bank Indonesia Regulation and Circular Letter on currency which allow the payment of Non-Tax State Revenue to be carried out in foreign currency. DKP-TKA is considered as Non-Tax State Revenue. Additionally, Regulation 35 states that if DKP-TKA has already been paid for:

  • work permits for non-resident directors and commissioners; and
  • temporary work permits for the 5 activities that have been removed from Regulation 16,

it will not be refunded.

9. Temporary work permit no longer required for attending meetings and giving trainings
Previous work permit regulation (16/2015) stated that for the purpose of attending meetings, giving speeches, giving training for the purpose of increasing industrial quality, for one time job assignments a foreigner is required to have temporary work permit.

This confused foreign investors as those activities previously could be held under a business visa. Ministry of Manpower responded and from the updated regulation (35/2015) this article has been removed.

10. IMTA – Foreign Workers Employment Permit is now required for foreign-domiciled Board of  , Directors, Board of Commissioners, Patrons, Executives and Supervisors

Update October 2015: this article was removed from the regulation and non-resident commissioners and directors are no longer required to have work permit.

11. Appointed Indonesian understudy worker should have relevant education background with foreign worker’s appointed position. Exception applied for: foreign workers under Temporary RPTKA and Urgent RPTKA, Board of Directors, Board of Commissioners, Patrons, Executives and Supervisors.

12. The new regulation introduces an online system for the application process. Ekspos/Interview (Penilaian Kelayakan) by Ministry of Manpower can now be done via Skype, one company only allowed to have one account. The online application can be submitted to www.tka-online.depnakertrans.go.id, 

13. The new regulation no longer requires TA.01 as requirement to obtain IMTA. Here is the full process to obtain RPTKA and IMTA.
old vs new process

RPTKA Application process

14. RPTKA  document requirements Download form here

General RPTKA Temporary RPTKA
Process Maximum 3 days Maximum 3 days
Max. duration Max 5 years, extendable Max 1 month, not extendable
Documents Required
  1. Reason for hiring foreign employee
  2. Completed RPTKA form
  3. Business permit
  4. Company’s deed of establishment
  5. Organization structure
  6. Letter of recommendation
  7. Domicile letter
  8. Tax Identification Number (NPWP)
  9. Statement letter to appoint Indonesian understudy workers

10. Statement letter to give education and training to Indonesian workers related to assigned position to foreign workers

11. Compulsory company manpower report

  1. Reason for hiring foreign employee
  2. Completed RPTKA form
  3. Business permit
  4. Company’s deed of establishment
  5. Organization structure
  6. Employment contract
  7. Domicile letter
  8. Tax Identification Number (NPWP)
  9. Compulsory company manpower report

 

15. IMTA  document requirements Download form here

General IMTA Temporary IMTA
Process Maximum 3 days Maximum 2 days
Max. duration Max 1 years, extendable Max 1 month, not extendable
Documents Required
  1. DKP-TKA proof of payment
  2. RPTKA
  3. Foreign worker’s passport
  4. Statement letter of appointed Indonesian worker
  5. Education relevant to foreign worker position
  6. Certificate of competence/ working experience of 5 years related to the position
  7. Draft Employment contract
  8. Evidence of insurance from Indonesian entity provider
  9. Letter of recommendation from relevant institutions.
  10. Photo 4×6
  11. Point no 4, 5, 6 and 7 is not required for BoD, BoC, Patrons, Executive and Supervisors.
  12. Additional docs: company’s deed of establishment (for BoD, BoC, patrons, executive and supervisors)
    1. DKP-TKA proof of payment
    2. RPTKA
    3. Evidence of insurance from Indonesian entity provider
    4. Foreign worker’s passport, which already includes visa
    5. Photo 4×6
1. RPTKA

2. Proof of Payment of DKPTKA from a bank appointed by minister

3. Photo 4×6

4. Evidence of insurance from Indonesian entity provider

5. Foreign worker’s passport, which already includes visa

16. Extending work permit

In order to extend work permit (IMTA), following documents need to be prepared:

  • Proof of payment of DPKK (US$1200/year)
  • Copy of proof of payment to the foreign worker
  • Copy of foreign worker tax card (NPWP)
  • Copy of insurance policy from an Indonesian-based insurance company
  • Copy of joining national security program
  • Copy of appointment of Indonesian co-worker (only for Non Director and Non Commissioner)
  • Realization report of transfer of knowledge and Indonesian co-worker training

The changes in the regulations make it absolutely crucial that foreign nationals extend their limited stay permits and work permits on time. Otherwise they’ll permits lose validity and the process needs to be started from beginning again and this time following the new regulations.

Start the extension process at least 2 months before the KITAS and IMTA expire.