Category: Human Resources Services, Compliance Services
Written by Samuel Sri Kurnia on 19/05/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.
Employee knowledge plays a critical role in determining a company’s success, especially when the business took a step to the international level. Hiring foreign workers allows a company to gain more experience and perspectives that are currently lacking. This foreign hire will usually carry a deep understanding of particular skills, products, systems, and policies.
According to Regulation Number 13 Year 2003 concerning Manpower, a foreign worker (Tenaga Kerja Asing / TKA) is a foreign resident who holds visas with the intention of working in Indonesia. TKA can start to work in Indonesia by Assignment and Recruitment. An assignment is the placement of employees by multinational companies to occupy a certain position in one of the branches or subsidiaries in Indonesia.
Recently, Indonesia has become well known as one of the largest economies and emerging markets in the world. Ministry of Law and Human Rights of the Republic of Indonesia and Directorate General of Immigration of the Republic of Indonesia reported that the total number of foreign visits to Indonesia (July 2018) reached 9.06 million.
Aside from growing economically, Indonesia has also transformed into a destination with increasingly attractive options for locals to work in a different city, and for foreigners to work in a different country. It sums up that Indonesia is an attractive country for foreigners who want to both work and stay in this exotic archipelago.
Similar to every other country in the world, a foreign employees must comply with the latest immigration laws in Indonesia. With that being said, hiring in Indonesia must adapt to the country’s human resource regulations and labor laws. Noticeably, employers will have to face legal repercussions if they violate these laws.
Certain foreigners may have some advantages in Indonesian industries. Highly skilled and knowledgeable foreigners will be able to teach their skills to and share their knowledge with Indonesian workers.
The number of TKA who are currently working in Indonesia has gradually been increasing. The Investment Coordinating Board (BKPM) reported that there are 95,335 foreign workers currently in Indonesia. However, although this number has been increasing, it is much less than what one might assume. When we compare it to the country’s total workforce of over 127 million individuals, the proportion of foreign workers in Indonesia is one of the world’s lowest at just 0.075% of the workforce.
BKPM chairman Thomas Lembong supports the fact. In a recent interview, Lembong stated that the foreign workforce in Singapore makes up 36% of its total workforce, while Malaysia’s and Thailand’s respective foreign workforces account for 15.3% and 4.5% of those countries’ total workforces. One of the countries with the highest proportion of foreign workers in the world is Qatar. In Qatar, foreign workers comprise 96% of the nation’s entire workforce.
The newest immigration regulation stipulated through Ministry of Manpower Regulation No. 8/2021, allows a greater degree of flexibility for TKA to work in Indonesia. With the newly regulated procedures, employing TKA for business creates more opportunities, such as:
Foreigners are able to hold positions where Indonesian nationals are not available or do not meet the requirements to do the job and are subject to the conditions that such positions are open for foreigners. Foreigners can be employed in Indonesia only for certain positions and periods.
Employers of TKA in this shall include:
Employers of foreign workers can only employ TKA in an employment relationship for a certain position and a certain time. Even so, employers of TKA in the form of Federal Civil Firm (Firma / Fa), the Limited/ Federal Partnership (CV), Associated Business (Usaha Bersama / UB), Trading Company (Usaha Dagang / UD) are prohibited from employing TKA except as provided in the State Law.
For all FDI, a foreigner could hold a position as a member of:
Except for DDI, a foreigner cannot hold a position as a member of the Board of Commissioners. According to the Attachment of Manpower Decree No. 40 of 2012, TKA cannot hold a position as:
According to Ministry of Manpower Regulation No. 8/2021, an RPTKA Approval (Pengesahan RPTKA) is the work permit for foreign workers in Indonesia, issued through the TKA Online system. The RPTKA Approval further serves as the basis to grant both the visa and stay permit for TKA.
While an approved RPTKA was also the work permit for foreign workers under the Ministry of Manpower Reg. 10/2018, it did not serve as the basis to grant immigration permits. Instead, the employer had to apply separately for a Notification (Notifikasi), which served as the basis to grant a Limited Stay Visa (Visa Tinggal Terbatas/VITAS). The VITAS further served as the basis to grant a Limited Stay Permit (Izin Tinggal Terbatas / ITAS) for work purposes.
Generally, any employer that intends to employ TKA must obtain an RPTKA Approval. An exception applies in cases where a foreigner is:
Pursuant to Ministry of Manpower Reg. 8/2021, there are four types of RPTKA Approval
Employers who will employ TKA shall have RPTKA. RPTKA is a basis to obtain Foreign Worker Employment Permit (Izin Menggunakan Tenaga Kerja Asing / IMTA). In order to receive RPTKA, the employer must apply online to the Directorate General of Guidance Employment and Broaden Employment Opportunities through the Director of Foreign Manpower Management by enclosing:
Once approved, the Indonesia Ministry of Manpower of the Republic of Indonesia will issue RPTKA Endorsement to the employer. The RPTKA Endorsement will then be used for the application of a TKA Employment Permit (IMTA). This application should be submitted via online to the Directorate General of Guidance Employment and Broaden Employment Opportunities through the Director of Foreign Manpower Management or go to BKPM OSS-C.
The general requirement for IMTA are as follows:
After receiving IMTA, the employee will then be able to apply for a temporary stay visa (Visa Tinggal Terbatas / VITAS). The general requirement for VITAS application are as follows:
Foreign workers are considered individual taxpayers when they reside in Indonesia for more than 183 days within a consecutive 12 months. Hence, foreign taxpayers have to register for Taxpayer Identification Number (Nomor Pokok Wajib Pajak / NPWP) at the tax service office.
The progressive tax rates for a foreign resident individual taxpayer in Indonesia based on the yearly earnings:
According to Ministry of Manpower Regulation No. 8/2021, an Employment Supervisor (Pengawas Ketenagakerjaan) of the Ministry of Manpower may issue a Memorandum of Examination (Nota Pemeriksaan/Memo) if it finds any alleged violations of foreign workers’ employment norms by an employer. The Memo must be enforced by the employer in question or a second Memo will be issued. If compliance is still lacking following the second Memo a notification letter on the imposition of administrative sanctions will be issued to the employer (see below for details on administrative sanctions).
Specifically, according to Article 49 (1) of Ministry of Manpower Regulation No. 8/2021, administrative sanctions shall be imposed on employers for the following violations of foreign worker employment norms:
Companies that violate the requirements, procedures, and procedures for licensing foreign workers, will be given the following sanctions:
All foreigners traveling to Indonesia for longer than 30 days stay must have a valid visa. Indonesia is known for having difficult immigration procedures that are tedious and frustrating. Long-term stay visas such as Business Visa, Social Visa, Dependant Visa, Work Permit, and ITAS require local sponsorship. Local sponsors may be an Indonesian company having relations with you, a visa agency, or an Indonesian citizen.
Putranto Alliance has a team of immigration lawyers and consultants who specialize in Indonesia Immigration regulation. Through experience and regular training, we are equipped with accurate and up-to-date regulations in order to provide timely immigration services to our clients. We are a local company that may also act as your sponsor if required.
Peraturan Menteri Ketenagakerjaan Nomor 8 Tahun 2021
Peraturan Pelaksanaan Peraturan Pemerintah Nomor 34 Tahun 2021 Tentang Penggunaan Tenaga Kerja Asing
Ministry of Manpower Reg. 8/2021 provides that an RPTKA Approval must be extended at least 30 days prior to its expiration.
The TKA should apply for KITAS from the local immigration office where he/ she is domiciled in Indonesia within 7 days after entering Indonesia. The following procedures also apply to the temporary hired foreigner/ expertise, such as specialized technician for temporary repair work, expert personnel for a short-term job position, and any affiliated foreigner for a specific work function.
Fines may be imposed for the violations in points 1 to 3 of the foreign worker employment norms above. Temporary suspension of RPTKA Approval application may be imposed for the violations in points 4 to 8 above, as well as for failing to pay imposed fines within two weeks. And the RPTKA Approval may be revoked for the violation in points 9 to 12 above, and for failing to execute the obligations contained in the temporary suspension of RPTKA Approval within three months.
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