On June 29, 2015, the Minister of Manpower (Minister) issued regulation number 16 of 2015 on the Procedures to Employ Expatriates (New Expatriate Regulation), which revokes the old regulation number 12 of 2013 (Old Regulation). The New Expatriate Regulation impacts expatriates who are planning to work in Indonesia and who are already working in Indonesia and the local companies employing the expatriates. In this column we will discuss the most important changes for expatriate employees and their employers.
Ratio Expatriate to Local Employees
In the old regulations it was not clearly regulated which ratio foreigner to local employees was required by the Minister. Based on internal regulation / general practice a ratio was used of 1 (foreigner):3 (local employees) or 1:5. Under article 3(1) New Expatriate Regulation, the ratio is now clearly regulated as 1:10. Paragraph (2) of the same article regulates that positions such as members of the Board of Directors and Board of Commissioners are exempted from the above requirement. The new ratio will have a huge impact on establishment of representative offices in Indonesia, which are usually small companies and cannot apply for above-mentioned exemption.
Temporary Plan for Using Foreign Manpower (RPTKA) and Temporary Work Permit
The Rencana Penggunaan Tenaga Kerja Asing, better known as RPTKA, is one of the requirements for foreigners to obtain a work permit (Izin Mempekerjakan Tenaga Kerja Asing, better known as IMTA) in Indonesia. A temporary RPTKA and IMTA are issued for short term jobs. The New Expatriate Regulation expands the requirement to obtain a temporary RPTKA and IMTA for, amongst others, the following activities:
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 commercial film;
3. providing lectures;
4. attending a meetings held with headquarters or representatives in Indonesia; and
5. conducting audits, production quality control, or inspection at the company's branch in Indonesia.
Under the Old Regulation, the above-mentioned activities did not require a temporary RPTKA and IMTA. Foreigners were able to perform these activities in Indonesia based on a Visit Stay Permit (Izin Tinggal Kunjungan).
Language Requirement for Expatriates in Indonesia
Under the Old Regulation it was regulated that a foreigner who intends to work in Indonesia must be able to communicate in the Indonesian language. This language requirement was further detailed in Ministry of Manpower regulation number 3 of 2015 on the Standard Operating Procedures For Permit Issuance for Using Foreign Manpower, which explains that for the Approval Recommendation Visa (TA-01) an Indonesian Language certificate is required.
The New Expatriate Regulation does not regulate the language requirement anymore, which may indicate that the actual implementation of the language requirement has been postponed for an undefined time. This is good news for many of the expatriates working in Indonesia who are unable to communicate in the Indonesian language.
IMTA Required for Directors not Residing in Indonesia
Under the Old Regulation there was a lot of discussion about whether or not directors/commissioners of Indonesian companies who do not reside in Indonesia are required to hold an IMTA and KITAS. Article 38 of the New Expatriate Regulation clarifies that for foreign directors and commissioners an IMTA is required. KITAS is however regulated by the Minister of Law and Human Rights. We expect that the Minister of Law and Human Rights will issue a regulation in line with this regulation, however the requirement to hold a KITAS for foreign directors is uncertain.
Our company awarded contract(s) for supplying tecnological equipment to generate electrical power in projects of Indonesia. Of the 100% of contract volume only 5% is to be completed in Indonesia (installation, testing commissioning). Why we must have working visa (312 type) or even KITAS? We do not grad any work opportunity to any Indonesian citizen as it is part of completion of technology delivered to Indonesia. No person in Indonesia is able to install and put into operation our equipment! This system is brutally unfair and incorrect. Are we supposed to be punished and persecuted for awarding contract(s) in Indonesia??? Please convey this message to Indonesian Government. Thank you.