What You Require To Know About The Expatriate Operating Permit In Indonesia?

Report 1 (13) of Law No. 13 of 2003 on Manpower (“Manpower Law”) defines Foreign Workers (“Expatriates”) as visa holders of foreign citizenship who come to Indonesia with the intention to operate inside Indonesia's territory. Expatriates are foreign workers who reside outdoors their native nation and settle abroad, e.g. in Indonesia. Employers seeking to employ Expatriates to operate with them in Indonesia should assure that the Expatriates have acquired a comprehensive set of Expatriate Function Permit as stipulated by the Ministry of Manpower in Indonesia.

In this short article, we will elaborate on four (4) vital points that all Employers hiring and/or in the procedure of hiring Expatriates should know and have an understanding of:

1. Who can be a Sponsor for a Function Visa?

DKP-TKA Payment Obligation for Employers / Sponsors

Employers or sponsors are expected to spend Experience and Talent Improvement Fund (“DKP-TKA”) in the quantity of USD 100/month (USD 1200/year) for every Expatriate hired to operate in Indonesia. DKP-TKA are paid in complete at the starting of the Operating Permit application process in Indonesia Rupiah (IDR), for the employment period that has been authorized by the Minister of Manpower.

The following employers or sponsors are not expected to spend DKP-TKA:

  • Government Agencies/Institutions
  • International Agencies (e.g. WHO, ILO, UNICEF, and so on.)
  • Representatives of Foreign Nations
  • Social Institutions and
  • Religious Institutions.

2. Prohibited Positions for Expatriates

The following are the causes why Expatriates operate in Indonesia:

  • As the Owner of sponsor business (Investor/Shareholders) and/or to act as a member of the Board of Executives in the business (ie.: President Director/ Director) 
  • As Specialists on specific abilities, for the transfer of understanding to Indonesians.

Please be informed that Indonesia Law regulates the Expatriates are not permitted to hold specific positions in Indonesia. These prohibited positions are mainly in the field of Human Sources Improvement (HRD), such as Personnel Director, Human Sources Manager, and HRD-connected Supervisors. The complete list of prohibited positions for expatriates is stipulated in the Minister of Manpower Decree No. 40 of 2012 (“Manpower Decree No. 40/2012”).

Other than the prohibited positions listed on Manpower Decree No. 40/2012, there are other positions prohibited for Expatriates who operate in specific fields, such as in the Oil and Gas Market.

Prohibition for Expatriates to hold Several Positions

According to short article 41 of Minister of Manpower Decree No. 16 of 2015 (“Manpower Decree No. 16/2015”) Employers are not permitted to double post Expatriates in numerous positions, such as:

  • Employ Expatriates for dual positions, no matter if each positions are inside the similar business, or in diverse providers
  • Employ Expatriates who are presently employed by other Employers.

Exempted from the double posting prohibtion are Expatriates who operate as members of the Board of Directors, or the Board of Commisisoners.

3. The Procedures to Receive the Function Permits

Each employer that employs Expatriates is below an obligation to acquire written permission from the Ministry of Manpower (“Function Permits”). The following are the Procedures to acquire the Function Permits in Indonesia:

Permits to be held by the hired Expatriate:

  • Restricted Keep Visa (Kartu Izin Tinggal Terbatas or “KITAS”)
  • Several Exit / Re-Entry Permit (“MERP”)
  • Registration Letter (Surat Tanda Melapor or “STM”)
  • Short-term Keep Registration Letter (Surat Keterangan Pendaftaran Penduduk Sementara or “SKKPM”)
  • Arrivals Permit Card (Kartu Ijin Pendatang or “KIJ”) and
  • Arrival Reporting Proof Letter (Lapor Kedatangan or “LK”).

Information expected from the sponsor business at the starting of the process consists of the planned: (1) name of sponsor business (two) organization domicile of the business (three) name of head of the business (four) job of Expatriates (five) job description of Expatriates (six) quantity of Expatriates hired (7) operate place of hired Expatriates (eight) period of Expatriates employment (9) wage of Expatriates (10) begin of employment (11) quantity of Indonesian workers hired in the sponsor business (12) the appointment of Indonesian workers as Expatriates companion and (13) instruction system for the Indonesian workers.

4. Obligations to Receive Other Licenses for Expatriates

Following a specific period of time, Expatriates functioning in Indonesia are expected to acquire other licenses in order to comply with their obligations as stipulated in the Manpower Decree No. 16 of 2015. The obligations are as follows:

  • Tax Compliance

Report 36 of Manpower Decree No. 16 of 2015 calls for Expatriates who have worked for additional than six (six) months in Indonesia to acquire Taxpayer ID Quantity (Nomor Pokok Wajib Pajak or “NPWP”). NPWP functions as tax compliance for legal subjects in Indonesia.

  • Neighborhood Insurance coverage Policy

Report 36 of Manpower Decree No. 16 of 2015 calls for Expatriates to have an insurance coverage policy in an insurance coverage business that is presently established in Indonesia as an Indonesian legal entity.

  • BPJS or Social Safety Agency Registration

Given that the issuance of Law No. 24 of 2011 on Social Safety Agency, Expatriates who have worked for at least six (six) months in Indonesia are also expected to participate in the National Safety Method. Employers should register their employee at the Social Safety Agency (Badan Penyelenggara Jaminan Sosial or “BPJS”) below two (two) safety applications: Employment and Overall health.