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19 October 2020 (closed)
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The Minister of Manpower (Minister) regulation number 16 of 2015 on the Procedures to Employ Expatriates (New Foreign Worker Regulation) which we discussed in a previous column, has lead to many complaints from foreign investors due to its stringent rules. As a result of these complaints the Minister of Manpower issued an amendment to the New Foreign Worker Regulation, number 35 of 2015 (Amendment). In this column we discuss the main changes of the Amendment.
Foreign Worker - Local Employee ratio
Under article 3 of the New Foreign Worker Regulation, companies employing foreign workers are required to have 10 local employees for each expatriate. The Amendment revokes article 3 of the New Foreign Worker Regulation. Officials of the Ministry of Manpower have confirmed that the current ratio is 1:1. The new ratio only applies for long term work permits and does not apply to short term work permits (discussed below).
Temporary Work Permit
Under article 16 and 46 of the New Foreign Worker Regulation companies were required to apply for a temporary work permit for the following purposes of visit:
1. providing guidance, counseling, and training in the application of industrial and technological innovation to improve the quality and design of industrial products;
2. the production of a film with a commercial nature which already received permission from the competent authority;
3. giving lectures;
4. attending a meeting held with headquarters or representatives in Indonesia;
5. conducting audits, production quality control, or inspection at the company's branch in Indonesia;
6. a foreign worker in a trial for its capability to work;
7. work which is completed at one point; and
8. work related to the installation of machinery, electric, after-sales service, or products in the exploratory business period.
The Amendment removed point 1, 3, 4, 6 and 7 from article 16 and 46. The consequence is that these purposes of activities no longer need a limited work permit. Officials of the Minister of Manpower explained to us that the activity under point 5, for a period less than 1 month also does not require a temporary work permit. Foreigners visiting Indonesia for these purposes can enter Indonesia through a business visit visa. Foreigner visiting Indonesia for the purpose stated in point 7 require a regular work permit.
Directors and Commissioners residing outside Indonesia
Under article 37 of the New Foreign Worker Regulation directors and commissioners of an Indonesian limited liability company (PT) who are living outside Indonesia were required to obtain a work permit (IMTA). The Amendment removes this requirement and explicitly states that a work permit (IMTA) is no longer mandatory for directors and commissioners who are living outside Indonesia.
In case directors and commissioners who live outside Indonesia and wish to visit Indonesia, they must obtain a work permit (RPTKA and IMTA). However they do not need to obtain a stay permit (KITAS). They can travel to Indonesia with a Visa on Arrival (VOA), business visa or free-visa (only applicable for the following 15 countries: Thailand, Malaysia, Singapore, Brunei, Philippine, Chili, Maroko, Peru, Vietnam, Ecuador, Cambodia, Laos, Myanmar, Hong Kong SAR, Macao SAR).
Increased Risks for Foreigners
Since business meetings are no longer regulated by the Ministry of Manpower, there is an increased risk investigators of the Ministry of Manpower will interpret business meetings performed by foreigners as working, which requires a work permit. Foreigners should therefore be extra cautious in performing business meetings, to avoid any sanctions from the Ministry of Manpower.