What do you need to know about expatriate work permit in Indonesia?

Article 1 (13) of Law No. 13 of 2003 on Manpower (“Labor Law”) defines Foreign Workers (“Expatriates”) as foreign citizenship visa holders who come to Indonesia with the intention to work within the territory of Indonesia. Expatriates are foreign workers who live outside their country of origin and settle abroad, for example in Indonesia. Employers looking to hire expatriates to work with them in Indonesia must ensure that the expatriates have acquired a full set of expatriate work permits as stipulated by the Indonesian Ministry of Manpower.

In this article, we will develop 4 (four) important things that all Employers hiring and/or in the process of hiring Expatriates should know and understand:

1. Who can be a Sponsor of a Work Visa?

Only the following entities can be sponsors of expats in Indonesia:

• Government Institutions, International Organizations, Representatives of Foreign States;
• Representative offices of foreign chambers, foreign companies or foreign news;
• Foreign Direct Investment Companies (Penanaman Modal Asing or PMA);
• Legal entities established based on the laws of Indonesia or foreign business entities registered with an authorized institution in Indonesia (ie Foreign Representative Office);
• Social, religious, educational and cultural institutions; Y
• Business services for show organizers (business).

Entities in the form of a civil association, firm, limited company, commercial companies and individual persons are prohibited from employing and/or acting as sponsors of Expatriates, unless the Laws and Regulations provide otherwise.

DKP-TKA Payment Obligation for Employers / Sponsors

Employers or sponsors must pay the Skills and Experience Development Fund (“DKP-TKA”) in the amount of USD 100 per month ($1,200 per year) for each expatriate hired to work in Indonesia. DKP-TKA are paid in full at the beginning of the work permit application procedure in Indonesian rupiah (IDR), for the period of employment approved by the Minister of Manpower.

The following employers or sponsors are not required to pay DKP-TKA:

• Government Agencies/Institutions;
• International agencies (eg WHO, ILO, UNICEF, etc.);
• Representatives of Foreign Countries;
• Social institutions; Y
• Religious institutions.

2. Prohibited Positions for Expatriates

The following are the reasons why expats work in Indonesia:

• As the Owner of the sponsoring company (Investor/Shareholders) and/or to act as a member of the company’s Board of Directors (ie: Chairman/Director);
• As Experts in certain skills, for the transfer of knowledge to Indonesians.

Please note that Indonesian law regulates that expatriates cannot hold certain positions in Indonesia. These prohibited positions are primarily in the Human Resource Development (HRD) field, such as Director of Personnel, Human Resources Manager, and HRD-related Supervisors. The complete list of prohibited positions for expatriates is stipulated in the Minister of Manpower Decree No. 40 of 2012 (“Manpower Decree No. 40/2012”).

In addition to the prohibited positions listed in the Labor Decree No. 40/2012, there are other prohibited positions for expatriates working in certain fields, such as the oil and gas industry.

Ban on Expatriates from Holding Multiple Positions

According to article 41 of the Minister of Manpower Decree No. 16 of 2015 (“Manpower Decree No. 16/2015”), employers are not allowed to duplicate the posting of expatriates in multiple positions, such as:

• Hire Expatriates for dual positions, whether both positions are within the same company or in different companies;
• Employ Expatriates who are currently employed by other Employers.

Expatriates who serve as members of the Board of Directors or the Board of Commissioners are exempt from the prohibition of double publication.

3. Procedures for Obtaining Work Permits

Any employer employing expatriates is required to obtain written permission from the Ministry of Manpower (“Work Permits”). The following are the Procedures to obtain Work Permits in Indonesia:

Permits in charge of the Sponsoring Company:

• Recruitment Scheme for Foreign Workers (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”);
• Telex Vitas;
• Foreign Workers Recruitment Permit (Izin Memperkerjakan Tenaga Kerja Asing or “IMTA”);

Permits to be possessed by the hired Expatriate:

• Limited stay visa (Kartu Izin Tinggal Terbatas or “KITAS”);
• Multiple Exit/Re-entry Permit (“MERP”);
• Registration Letter (Surat Tanda Melapor or “STM”);
• Temporary Stay Registration Letter (Surat Keterangan Pendaftaran Penduduk Sementara or “SKKPM”);
• Arrival Permit Card (Kartu Ijin Pendatang or “KIJ”); Y
• Arrival Report Evidence Letter (Lapor Kedatangan or “LK”).

The information required from the sponsoring company at the beginning of the procedure consists of the following: (1) name of the sponsoring company; (2) business address of the company; (3) name of the head of the company; (4) Expatriate work; (5) expatriate job description; (6) number of Expatriates hired; (7) place of work of the contracted Expatriates; (8) period of employment as an Expatriate; (9) Expatriate salary; (10) commencement of employment; (11) number of Indonesian workers employed by the sponsoring company; (12) the appointment of Indonesian workers as escorts for expatriates; and (13) training program for Indonesian workers.

4. Other Licensing Obligations for Expatriates

After a certain period of time, expatriates working in Indonesia must obtain other licenses to fulfill their obligations as stipulated in the Decree on Manpower No. 16 of 2015. The obligations are as follows:

• Tax compliance

Article 36 of the Manpower Decree No. 16 of 2015 requires expatriates who have worked for more than 6 (six) months in Indonesia to obtain Tax Identification Number (Nomor Pokok Wajib Pajak or “NPWP”). NPWP works as tax compliance for legal subjects in Indonesia.

• Local insurance policy

Article 36 of the Decree on Manpower No. 16 of 2015 requires expatriates to have an insurance policy with an insurance company that is currently established in Indonesia as an Indonesian legal entity.

• BPJS Registry or Social Security Agency

Since the enactment of Law No. 24 of 2011 on the Social Security Agency, expatriates who have worked for at least 6 (six) months in Indonesia must also participate in the National Security System. Employers must register their employee with the Social Security Agency (Badan Penyelenggara Jaminan Sosial or “BPJS”) under 2 (two) security programs: Employment and Health.