4 important things about an expat work permit in Indonesia

What do you need to know about the Indonesian expat work permit?

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

In this article, we will delve into 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 sponsor 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 that are established based on Indonesian laws or foreign business entities that are registered with an authorized institution in Indonesia (ie Foreign Representative Office);

• Social, religious, educational and cultural institutions; Y

• Business entertainment organizer services (impresariat).

Entities in the form of a civil association, firm, limited partnership, commercial partnerships and individuals are prohibited from employing and / or acting as sponsor of Expatriates unless the Laws and Regulations stipulate 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 / month (USD 1200 / year) for each Expatriate hired to work in Indonesia. DKP-TKA is paid in full at the beginning of the Indonesian Rupiah (IDR) work permit application procedure, for the period of employment that has been 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 expats

The following are the reasons expats work in Indonesia:

• As owner of the sponsoring company (Investor / Shareholders) and / or to act as a member of the Company’s Board of Executives (ie: Chairman / Director);

• As experts in certain skills, for the transfer of knowledge to Indonesians.

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

In addition to the prohibited positions listed in the Manpower Decree No. 40/2012, there are other prohibited positions for Expatriates working in certain fields, such as in the Oil and Gas Industry.

Ban for expatriates from holding multiple positions

In accordance with article 41 of the Decree of the Ministry of Manpower no. 16 of 2015 (“Labor Decree No. 16/2015”), employers are not allowed to double-post Expatriates in multiple positions, such as:

• Employing expatriates for dual positions, whether both positions are within the same company or in different companies;

• Employing expatriates who are currently employed by other employers.

Expatriates serving 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

Every employer employing Expatriates is required to obtain written permission from the Ministry of Manpower (“Work Permits”). The following are the procedures for obtaining work permits in Indonesia:

Permits to be owned by the Sponsoring Company:

• Plan for the recruitment of foreign workers (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”);

• Telex Vitas;

• Permit to hire foreign workers (Izin Memperkerjakan Tenaga Kerja Asing or “IMTA”);

Permits that the hired Expatriate must have:

• Limited stay visa (Kartu Izin Tinggal Terbatas or “KITAS”);

• Multiple Exit / Reentry Permit (“MERP”);

• Letter of registration (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

• Letter of Evidence of Arrival Report (Lapor Kedatangan or “LK”).

The data required from the sponsoring company at the beginning of the procedure consists of the planned: (1) name of the sponsoring company; (2) business address of the company; (3) name of the head of the company; (4) expatriate work; (5) job description of expatriates; (6) number of expatriates hired; (7) workplace of the expatriates hired; (8) Expatriate employment period; (9) expatriate salary; (10) start of employment; (11) number of Indonesian workers hired at the sponsoring company; (12) the appointment of Indonesian workers as expatriate companions; and (13) training program for Indonesian workers.

4. Obligations to obtain other licenses for expatriates

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

• Tax compliance

Article 36 of the Decree on manpower no. 16 of 2015 requires expatriates who have worked for more than 6 (six) months in Indonesia to obtain the Taxpayer 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 expats to have an insurance policy with an insurance company that is currently established in Indonesia as an Indonesian legal entity.

• Register of BPJS 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.