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Major changes made to Indonesian regulations for employing Foreign Nationals

Posted: 16/07/2015              Author: Michael W. Roosevelt

Implementation of New Regulation, “Regulation 16 Year 2015”

On July 10th 2015, the Minister of Manpower in Indonesia implemented a new regulation (“Regulation 16, Year 2015”) for employing foreigners.

See below for the most important aspects of Regulation 16 Year 2015:

a. Associations and Cooperatives are now prohibited from employing foreign nationals unless permitted under the prevailing laws and regulations.

b. A Temporary Work RPTKA approval and a Temporary Work IMTA are now required for:

  • Providing guidance, counselling, training in the implementation and development of innovative industrial technology to improve product quality and design and cooperation in offshore marketing of Indonesian goods and services
  • Making commercial films with a permit from the authorized institution
  • Conducting seminars
  • Participating in meetings with the central or representative office in Indonesia
  • Conducting audits, quality control and inspections of Indonesian branches
  • Foreign manpower on probation
  • One-off work
  • Work related to machinery and electric power installations, aftersales service, products in test markets.

The new regulation imposed more restrictions for activities that are normally accepted for business visa, or Visa on Arriva (VOA).

c. Additional new requirements for the Employer as foreign nationals are now required to:

  • Show evidence of an insurance policy from an Indonesian entity
  • Hold a Taxpayer Registration Number (NPWP) (except for those undertaking temporary and entertainment work)
  • Be enrolled in the National Social Security Program for manpower (SJSN) if they have been working in Indonesia for more than 6 months (exceptions made for those undertaking temporary and entertainment work)

d. Work Permits for Non–Resident Directors and Commissioners.

All foreign nationals who hold the following positions and are domiciled abroad (lives outside of Indonesia) and have no intention to work in Indonesia must still obtain a Work Permit sponsored by a valid Indonesian entity.

  • Director of an Indonesian company
  • Commissioner of an Indonesian company
  • Member of the Patrons, the Management and the Supervisors of an Foundation (Yayasan)

e. Changes to quota for foreign to Indonesian employees now 1:10 (Previously, the ratio was 1:5)

The new regulation requires an employer to have a ratio of 1 foreign national to at least 10 Indonesian workers. However this 1:10 ratio does not apply for foreign nationals who are:

  • Members of the Board of Directors or Board of Commissioners of an Indonesian company
  • Members of the Patrons, the Management and the Supervisors of a Foundation (Yayasan)
  • Employed for a job that is “an emergency and urgent” in nature
  • Employed for a temporary job
  • Employed for impresario services (entertainment services e.g. temporarily bringing in or sending back foreign workers in the field of arts and sports)

 

Impact to Employer and Foreign Nationals in Indonesia

Please note that there is no transition period regarding this new regulation. The new regulation takes effect immediately. We understand that this may cause inconvenience for employers in Indonesia especially if the foreign national’s Work Permit application is about to be processed or plans have been made to hire or transfer foreign employees to Indonesia. In this regard, we advise that you to speak with your immigration advisors immediately to better manage your foreign national’s Work Permit applications. 

 

Should you have any questions on the above updates, please contact:

Michael W. Roosevelt
Relocation Services Manager 
Santa Fe Relocation Services
Jakarta, Indonesia
Direct: +62 21 2961 2990
Mobile: +62 811 198 6310
michael.roosevelt@santaferelo.com