INDONESIAJuly 31, 2015

The Indonesian Ministry of Manpower (MOM) has recently announced several significant changes to their immigration regulations and requirements. These changes will affect nearly all work permit applicants and companies employing foreign nationals (either directly or indirectly).

What’s Changed?

10:1 Ratio for Indonesian:Foreign Employees Required

Although traditionally there have been unwritten guidelines that all Indonesian companies sponsoring foreign employees should maintain at least a 10:1 ratio of local to foreign employees, recent regulations have now written this requirement into law. The MOM has indicated that it will rely on the company’s Mandatory Manpower Report in order to establish the 10:1 ratio.

However, the MOM has also established several exceptions for employers. Thus, the 10:1 ratio will not apply to the following:

• Foreign nationals working in temporary jobs;
• Emergency or Urgent need positions for which a foreign national is hired;
• Foreign nationals appointed as Directors or Commissioners; or
• Temporary positions for athletes or artists.

New Short-Term Work Authorization Categories Available

The complete work and residence authorization process in Indonesia can be extremely costly and time consuming. In good news for employers, however, the MOM has established two new short-term work authorization categories:

• The Expatriate Placement Plan (RPTKA) for Emergency/Urgent Work – issued for periods of up to one (1) month; and
• The Expatriate Placement Plan (RPTKA) for Temporary Work – issued for periods of up to six (6) months.

While the exact regulations remain unclear regarding the requirements for these two new work authorizations, it is widely believed that the MOM will require (in addition to other basic requirements) a company letter of support documenting the urgent/emergency nature of the work being performed. 

New Definition of Permissible Business Activities

The MOM has also removed several permissible activities for business-visa holders. Thus, work authorization will now be required to perform the following activities:

• Work activities related to machinery or electrical installations, and/or after-sales/product service;
• Performing training, mentoring, or counseling activities;
• Performing internal company audits, inspections, or production quality controls at an Indonesian branch office;
• Attending meetings organized by the director of an office or a representative office;
• Undergoing skills competency assessments in-country;
• One-off or ad-hoc jobs; and/or
• Providing lectures or presentations.

Foreign nationals engaging in any of the above activities will be required to obtain work authorization, most likely via the aforementioned new short-term work authorization categories now available.

Non-Resident Directors and Commissioners to Require Work Permits

Finally, another new regulation appears to require that all foreign directors and commissioners of Indonesian companies will be required to hold proper work authorization in Indonesia, regardless of whether they reside in Indonesia or abroad.

Many of the details of this new regulation remain unclear and contradictory to current immigration regulations (for example, work and residence permit applicants are required to indicate a local Indonesian address of residence). As there are many questions still surrounding this new regulation, the MOM is expected to issue clarifications in the upcoming weeks. Pro-Link GLOBAL continues to monitor this situation closely and will report on any announcements as they are made public.

ACTION ITEMS FOR EMPLOYERS

Companies with any type of presence in Indonesia should take close note of these changes as they affect many aspects of immigration matters. General processing times may be delayed for in the upcoming weeks as the Indonesian immigration officials receive training and streamline their internal systems to handle the new regulations.

All companies operating in Indonesia should become familiar with the new permissible business activities, as well as the new short-term work authorization options offered by the MOM. Foreign nationals must obtain a work authorization (often will be the new short-term authorizations) in order to legally engage in any of the above-listed activities. This now includes, but is not limited to, foreign nationals performing trainings, audits, inspections, and/or work on machinery (as part of after-sales service or otherwise).

For those companies who may not employ a sufficient percentage of Indonesian citizens, an internal assessment of hiring practices may be required in order to sponsor any future foreign employees. The MOM has indicated that they will strictly adhere to the new 10:1 ratio requirement when it comes to work permit applications.

Finally, Indonesian companies whose director or commissioner resides outside of Indonesia should begin preparations in case that individual will in fact require work authorization in the country. Please reach out to your Pro-Link GLOBAL Client Relations Team Member should you have any questions or concerns regarding this possible new requirement. Pro-Link GLOBAL continues to monitor this development closely and will provide updates and clarifications as they are made public.

Want more alerts from Pro-Link GLOBAL? Subscribe to our Blog Here!

Caveat Lector | Warning to Reader

This is provided as informational only and does not substitute for actual legal advice based on the specific circumstances of a matter. Readers are reminded that Immigration laws are fluid and can change a moment’s notice without any warning. Please reach out to your local Pro-Link GLOBAL specialist should you require any additional clarification. This alert was prepared by Pro-Link GLOBAL’s Knowledge Management team.

Information contained in this Global Brief is prepared using information obtained from various media outlets, government publications and our KGNM network of immigration professionals. Written permission from the copyright owner and any other rights holders must be obtained for any reuse of any content posted or published by Pro-Link GLOBAL that extends beyond fair use or other statutory exemptions. Furthermore, responsibility for the determination of the copyright status and securing permission rests with those persons wishing to reuse the materials. Interested parties are welcome to contact the Knowledge Management Department (km@pro-linkglobal.com) with any additional requests for information or to request reproduction of this material.

Visit us at: www.pro-linkglobal.com | Email us at: info@pro-linkglobal.com | Call us at: 1877 PLG 8754