What should you know about the expatriate work permit in Indonesia?
Article 1 (13) of Labor Law No. 13 of 2003 (the “Labor Law”) defines foreign workers (“expatriates”) as holders of citizenship visas for foreigners who come to Indonesia to work in Indonesian territory. Expatriates are foreign workers who live outside their country of origin and settle abroad, for example, in Indonesia. Employers seeking to hire expatriates to work with them in Indonesia should ensure that expatriates obtain a full set of expatriate work permits as stipulated by the Ministry of Manpower in Indonesia.
In this article, we will develop 4 (four) important things that all employers who employ and employ expatriates should know and understand:
1. Who can sponsor a work visa?
Only the following entities are allowed to care for expatriates in Indonesia:
- Governmental institutions, international organizations and representatives of foreign countries;
- Representative offices of foreign rooms, foreign companies or international news;
- Foreign direct investment companies (Penanaman Modal Asing or PMA);
- Legal entities created based on Indonesian laws or foreign commercial entities registered with a licensed institution in Indonesia (i.e., an external representation office);
- Social, religious, educational and cultural institutions; And
- Business services organizer (publishing).
Entities in the form of civil societies, companies, limited partnerships, commercial partnerships, and personnel are employed and to act as a sponsor for expatriates unless the law and regulations provide otherwise.
DKP-TKA Payment Obligation to Employers / Sponsors
Employers or sponsors are required to pay the Experience and Skills Development Fund (“DKP-TKA”) for $ 100 per month ($ 1,200 annually) for each expatriate assigned to work in Indonesia. DKP-TKA is paid in full at the beginning of the IDR application process, for the period of work approved by the Minister of Manpower.
The following employers or sponsors are not required to pay DKP-TKA:
- Government agencies/institutions
- International agencies (such as WHO, ILO, UNICEF, etc.);
- Representatives of foreign countries.
- Social institutions; And
- Religious Institutions.
2. Jobs prohibited to expatriates
Here are the reasons why expatriates work in Indonesia:
As the owner of the sponsoring company (the investor/shareholders) and to act as a member of the company’s board of directors (such as the chairman and director);
As experts in specific skills, to impart knowledge to Indonesians.
Please note that Indonesian law regulates expatriates who are not allowed to hold certain positions in Indonesia. These prohibited positions lie mainly in the field of human resource development (HRD), such as the director of personnel affairs, the director of human resources, and supervisors associated with human resource development. The full list of jobs prohibited for migrants is provided for in Decree No. 40 of 2012 of the Minister of Manpower (“Decree No. 40/2012”).
In addition to the prohibited jobs listed in Labor Decree No. 40/2012, other tasks are not permitted for expatriates working in specific fields, such as the oil and gas industry.
Preventing expatriates from holding multiple positions
Under Article 41 of Decree No. 16 of 2015 regarding the Ministry of Manpower (“Decree No. 16/2015 on the Workforce”), employers are not permitted to double expatriate workers in several jobs, such as:
Recruitment of expatriates in dual employment, whether they are in the same company or different companies;
Recruitment of expatriates currently employed by other employers.
Expatriates who serve as members of the Board of Directors or Board of Commissioners are exempt from the double ban on publication.
3. Procedures for obtaining work permits
Any employer who uses migrant workers is required to obtain a written authorization from the Ministry of Manpower (“work permit”). Here are the procedures for obtaining a work permit in Indonesia:
The permits held by the sponsoring company:
- Employment plan for foreign workers (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”);
- Telex Vitas;
- Foreign worker permit (Izin Memperkerjakan Tenaga Kerja Asing or “IMTA”);
Permits held by the tenant’s expatriate:
Limited residence visa (Kartu Izin Tinggal Terbatas or “KITAS”);
• Multiple exit/re-entry permit (“MERP”);
A letter of registration (Surat Tanda Melapor or “STM”);
• Letter of registration for temporary residence (Surat Keterangan Pendaftaran Penduduk Sementara or “SKKPM”);
• Access permit card (Kartu Ijin Pendatang or “KIJ”); And
• Access recognition report (Lapor Kedatangan or “LK”).
The data required from the sponsoring company at the start of the procedure is made up of the diagram: (1) the name of the sponsoring company. (2) the place of business of the company; (3) The name of the president of the company. (4) The work of expatriates. (5) Job descriptions for expatriates. (6) The number of rented arrivals; (7) The workplace of hired expatriates; (8) Duration of employment of expatriates. (9) Salary of expatriates. (10) start work; (11) The number of Indonesian workers hired in the sponsoring company; (12) The appointment of Indonesian workers as a companion for expatriates; And (13) training program for Indonesian workers.
4. Obligation to obtain other licenses for expatriates
After a certain period, expatriates working in Indonesia are required to receive additional permits to comply with their duties as stipulated in the workforce decree No. 16 of 2015. The requirements are as follows:
• Tax liabilities
Article 36 of the decree on staffing No. 16 of 2015 requires expatriates who have worked more than 6 (six) months in Indonesia to obtain a tax identification number (Nomor Pokok Wajib Pajak or “NPWP”). NPWP serves as tax compliance for legal matters in Indonesia.
• A local insurance policy
Article 36 of the Labor Decree No. 16 of 2015 requires expatriates to have an insurance policy with an insurance company currently established in Indonesia as an Indonesian legal entity.
• BPJS or Social Security Agency registration
Since the promulgation of Law No. 24 of 2011 concerning the Social Security Agency, expatriates who have worked for at least 6 (six) months in Indonesia are required to participate in the national security system. Employers must register their employees with social security (Badan Penyelenggara Jaminan Sosial or “BPJS”) under 2 (two programs) of security: employment and health.