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4 important things about an expat work permit in Indonesia

4 important things about an expat work permit in Indonesia

What you need to know about an expat work permit in Indonesia?

Article 1(13) of Law No. 13 of 2003 on Manpower (“Manpower Law”) defines foreign workers (“expatriates”) as holders of foreign citizenship visas who come to Indonesia with the intention of working 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 should ensure that expatriates have a full set of expatriate work permits as stipulated by the Ministry of Manpower, Indonesia.

In this article, we are going to explain 4 (four) important things that all employers and/or in the expat recruitment process should know and understand:

1. Who can be a business visa sponsor?

Only the following entities are allowed to sponsor expatriates in Indonesia:

• Government institutions, international bodies and representatives of foreign countries.
• Representative offices of foreign chambers, foreign companies or foreign news.
• Foreign direct investment companies (Penanaman Modal Asing or PMA).
• Legal entities created based on the laws of Indonesia or foreign business entities registered in an authorized enterprise in Indonesia (such as a foreign representative office);
• Social, religious, educational and cultural institutions. And
• Entertainment organizer (empressaries) business services.

Entities in the form of civil associations, corporations, limited partnerships, business partnerships and individuals are prohibited from employing and/or acting as sponsors for expatriates unless otherwise provided by laws and regulations.

DKP-TKA payment obligation to employers/sponsors

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

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

• Government agencies/institutions.
• International agencies (eg WHO, ILO, UNICEF, etc.).
• Representatives of foreign countries.
• social institutions; And
• Religious institutions.

2. Jobs prohibited for expatriates

The following are the reasons why expats work in Indonesia:

• As an owner of the sponsoring company (investor/shareholder) and/or to serve as a member of the company’s Board of Executive Directors (ie: Chairman/Director);
• As experts in certain skills, to impart knowledge to Indonesians.

Please be aware that the law of Indonesia regulates that expatriates are not allowed to occupy certain positions in Indonesia. These restricted jobs are mostly in the field of Human Resource Development (HRD), such as Personnel Manager, Human Resource Manager and HRD related supervisors. The full list of jobs prohibited for expatriates is provided in Minister of Manpower Decision No. 40 of 2012 (“Manpower Decree No. 40/2012”).

Other than the prohibited jobs listed in Manpower Decree No. 40/2012, there are other jobs prohibited for expatriates working in certain fields, such as the oil and gas industry.

Preventing expatriates from holding multiple positions

According to Article 41 of Minister of Manpower Decision No. 16 of 2015 (“Manpower Decree No. 16/2015”) employers may not double expatriate jobs in multiple jobs, such as:

Employing expatriate workers to fill dual jobs, whether both positions are within the same company or in different companies.
Employment of expatriates who are currently employed by other employers.

Expats serving as members of the Board of Directors or the Board of Commissioners shall be exempted from the prohibition of double publication.

3. Procedures for obtaining work permits

Every employer who employs expatriate workers is obligated 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 held by the sponsoring company:

• Foreign Worker Employment Scheme (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”);
• Telex Vitas.
Foreign Worker Employment Permit (Izin Memperkerjakan Tenaga Kerja Asing or “IMTA”);

Permits that the rented expatriate must hold:

• Limited stay visa (Kartu Izin Tinggal Terbatas or “KITAS”);
• Multiple Exit/Re-Entry Permit (“MERP”);
• Letter of Registration (Surat Tanda Mylapore or “STM”);
• Temporary Residence Registration Letter (Surat Keterangan Pendaftaran Penduduk Sementara or “SKKPM”);
• Access Permit Card (Kartu Ijin Pendatang or “KIJ”); And
• Letter of Proof of Arrival (Labor Kedatangan or “LK”).

The data requested from the sponsoring company at the start of the procedure consists of the outline: (1) the name of the sponsoring company; (ii) the domicile of the company; (3) The name of the company’s president. (4) Employment for expatriates. (5) Job description for expatriates. (6) The number of expatriates appointed. (7) The workplace of the designated expatriates. (8) Duration of employment of expatriates. (9) Expatriate wages. (10) Commencement of work; (11) The number of Indonesian workers employed in the sponsoring company. (12) Appointment of Indonesian workers as companions of expatriates. and (13) training programs for Indonesian workers.

4. Obligations to obtain other licenses for expatriates

After a certain period of time, expatriates working in Indonesia are required to obtain other licenses in order to comply with their obligations as stipulated in Manpower Decree No. 16 of 2015. The obligations are as follows:

• Tax compliance

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

• Local insurance policy

Article 36 of Manpower Decree Number 16 of 2015 requires expatriates to have an insurance policy in an insurance company currently incorporated in Indonesia as an Indonesian legal entity.

• BPJS or Social Security Agency registration

Since the promulgation of Law No. 24 of 2011 regarding the Social Security Agency, expats who have worked for at least 6 (six) months in Indonesia are also required to participate in the National Security System. Employers must register their employees with the Social Security Agency (Badan Penyelenggara Jaminan Sosial or “BPJS”) under 2 (two) guarantee programmes: Employment and Health.

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