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Can I Employ Foreigners in my Company?

Yes, but this depends on the type of company you decide to incorporate in Indonesia. In the framework of investment, foreigners are allowed to hold positions where Indonesian nationals are not available or do not meet the requirements to do the job and subject to the conditions that such positions are open for foreigners. Foreigners can be employed in Indonesia only for certain positions and certain working period. An Indonesian company may employ foreigners but they would need to comply with the regulations that were streamlined by the Ministry of Manpower and the Ministry of Law and Human Rights. These regulations are as follows:  

 

Regulation No. 16 of 2015 – Procedures for the Utilization of Foreign Employees

Indonesia’s Minister of Manpower (MoM) issued the Regulation No. 16 of 2015 on Procedures for the Utilization of Foreign Employees. This has led to many difficulties experienced from foreign investors due its harsh rule towards foreigners. The few key points of Regulation 16/2015 include: 

  • new requirement for non-resident directors and commissioners of Indonesian companies to hold a work permit 
  • changes to the scope of work permitted under a temporary work permit 
  • a new foreign-to-local employee ratio for hiring expatriates. 

 

Regulation No. 20 of 2018 – The Use of Foreign Workers in Indonesia 

The Indonesian Minister of Manpower, Hanif Dhakiri, is positive that a more efficient and simpler permit application process for foreign workers will result in rising foreign direct investment towards the country which will then also potentially lead to more employment opportunities for the local population. Hence, this new regulation aims at simplifying the permit application process for foreign workers, hence making the process more efficient and faster. 

This regulation were the newest regulation that had came into effect but it still contains a number of unclear policies that will be sorted out and streamlined by the Ministry of Law and Human Rights and the Ministry of Manpower. 

Essence of the Presidential Regulation No. 20/2018 on the Use of Foreign Workers in Indonesia: 

  • A Temporary Stay Visa (VITAS) is required by every foreign worker in Indonesia. This VITAS can be requested by the employer of the foreign worker or the foreign worker himself at the Ministry of Law and Human Rights. 
  • Any company in Indonesia that wants to hire an expatriate should first take into consideration on whether the position can be replaced by an Indonesian citizen. This is because they would not be allowed to hire an expatriate in their company unless the work requires a skill set of the expatriate that no other local citizen possesses. 
  • Employers must present all data of the foreign worker to relevant ministry or government official of those that the employers wish to hire. 
  • The stay permit of the foreign worker has a maximum duration of two years but can be extended in line with existing regulations. 
  • Employers must note that foreign workers cannot be hired in the human resource department of any company in Indonesia and/ or in certain other jobs specified by the government. 
  • The relevant ministry or government official will only require two working days on the processing period for the foreign worker’s data. 
  • The Expatriate Placement Plan (RPTKA) is no longer compulsory for the following types of foreign worker: 
  • foreign shareholders who also holds the role of a director or commissioner in a company in Indonesia, 
  • foreign workers in jobs that are needed by the Indonesian government. This simply means that these types of foreign worker can directly apply for a work permit (in Indonesian: Izin Mempekerjakan Tenaga Kerja Asing, or IMTA) at the Ministry of Manpower, 
  • diplomatic or consular officers 
  • Every employer is required to register the foreign worker in the Manpower Social Security (in Indonesian: BPJS Ketenagakerjaan) in case they work in Indonesia for more than six months. Nevertheless, they can also opt for a similar insurance from an Indonesia-based insurance company. 

 

Hiring a Foreigner in a Local Company, PT 

As an employer of a Local Company, PT, the limitations to hire foreign experts depends on the capital of the company. In accordance to the regulation No. 40 of the year 2007, employers of a Local Company, PT can only hire a foreign expert from Medium and Large but not for Micro and small companies in Indonesia.  

Micro  Capital less than IDR 50 million  Cannot hire foreign experts 
Small  Capital of IDR 50 – 500 million  Cannot hire foreign experts 
Medium  Capital of IDR 500 million to 10 billion  Can hire foreigners, additional limitations depending on industry 
Large   Capital of IDR 10 billion  Can hire foreigners, same as foreign owned companies 

 

 

Recruitment Procedures  

Employer who wishes to employ foreign workers in Indonesia must follow the right recruitment procedure in Indonesia. To begin with employers from Local, PT or Foreign, PT PMA Company must submit the Foreign Worker Employment Plan (RPTKA) application to the Ministry of Manpower of the Republic of Indonesia online to get an approval. The RPTKA is a basis to obtain Foreign Workers Employment Permit (IMTA).  

 

To obtain the RPTKA, employer must first enclose the following: 

  • Explanation and reason to employ expatriate. 
  • Completed RPTKA form. 
  • Licence from authorize ministry. 
  • Article of association of legal entity that has been legalized by authorized ministry. 
  • Organization structure of the employer company. 
  • Letter of the employer domicile from regional government. 
  • Letter of Appointment for Indonesian manpower as assistant to the foreigner and mentoring program plan. 
  • Letter of Statement for the capacity to provide education and training for Indonesian manpower in accordance with the qualifying position occupied by the foreign worker. 
  • Employer Tax ID (NPWP). 
  • Copy of valid obligatory report of employment in accordance to State Law No. 7 of 1981. 
  • Recommended position that will be occupied by the foreign worker from technical ministries (if required). 

 

Once the application is approved by the Ministry of Manpower of the Republic of Indonesia, the RPTKA endorsement will be issued to the employer. Employer can then use the RPTKA endorsement to apply for the IMTA. Similarly, this application can be made online to the Directorate General of Guidance Employment and Broaden Employment Opportunities through the Director of Foreign Manpower Management. 

 

To successfully obtain the IMTA, the following must be enclosed: 

  • RPTKA Endorsement. 
  • Transfer receipt of Compensation Fund for Foreign Worker (Dana Kompensasi Penggunaan or DKP) with the value of USD 1,200 per year from Government Bank, which is appointed by Minister of Manpower of the Republic of Indonesia. 
  • Proof of insurance policy from the insurance company incorporated in Indonesia. 
  • Foreign worker’s passport. 
  • Photo size of foreign worker 4×6 cm (2 copies). 
  • Sufficient educational background proof from the foreign worker for the job position. 
  • Competency certificate or working experience minimum 5 years correspondent with the job position. 
  • Contract agreement between the foreign worker and the employer. 
  • Recommendation for the foreign worker from the authorized agency based on the job field (if required). 

 

After receiving the IMTA, then and only then will the employee is able to apply for the Temporary Stay Visa (Visa Tinggal Terbatas or VITAS). 

 

To successfully apply for VITAS, employees must satisfy the following Requirements: 

  • The foreign worker submits VITAS application to Indonesian Embassy Representative. 
  • The foreign worker should pay for the telex visa approval cost. 
  • The Indonesian Embassy Representative will forward the application to Directorate of Immigration. 
  • When the VITAS application is accepted, The Indonesian Embassy Representative will issue the visa. The foreign worker also has to pay for the visa fee. 
  • After obtaining a visa, the foreign worker will head to Indonesia, and will be granted with admission stamp upon arrival. 
  • Foreign worker should report to the local immigration office where he/ she domicile in Indonesia to take biometric and interview and also pay the cost of limited stay permit. 
  • VITAS issued 

 

If the VITAS application is submitted by the Employer, then: 

  • The employer submits VITAS application to Directorate of Immigration. 
  • The employer has to pay for the telex visa approval cost. 
  • When the VITAS application is approved, the employer will get visa approval letter, and the approval was also sent to Indonesian Embassy representative. 
  • The foreign worker has to come to the Indonesian representative to apply for a visa while carrying the approval letter and pay for visa fee. 
  • After obtaining a visa, the foreign worker will head to Indonesia, and will be granted with admission stamp upon arrival. 
  • Foreign worker should report to the local immigration office where he/ she domicile in Indonesia to take biometric and interview and also pay the cost of limited stay permit. 
  • VITAS issued. 

 

Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.

Paul Hype Page & Co. have 3 physical offices in Singapore, Malaysia and Indonesia

Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.

 

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Step 1- Listen to your Business plan and Relocation needs.

Step 2- Analysis your Tax Planning

Step 3- Recommend the most suited type of Company Incorporation, Open Bank account and Work Visa

Step 4- Arrange for your Spouse and Children Visa

Step 5- Assist as your company to hire staffs and handle all HR matters

Step 6- Every financial year end, we assist you with your yearly OSS Finanical and Tax Compliance

Step 7- Assist you to expand business to Malaysia, Indonesia, Vietnam and Thailand.

Get in Touch with Us Today.

 

Paul Hype Page

Website: https://www.paulhypepage.co.id

Posted on February 27, 2019 at 12:13 pm
Categories: FAQ

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