Ways and methods in which employers can hire a foreign employee in Indonesia in accordance to the Indonesian regulations.

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.

MicroCapital less than IDR 50 millionCannot hire foreign experts
SmallCapital of IDR 50 – 500 millionCannot hire foreign experts
MediumCapital of IDR 500 million to 10 billionCan hire foreigners, additional limitations depending on industry
Large Capital of IDR 10 billionCan hire foreigners, same as foreign owned companies